Civitas Resources Inc (CIVI)

Civitas Resources Inc's solvency ratios indicate its ability to meet its long-term financial obligations and the extent to which it relies on debt for funding.

1. Debt-to-assets ratio:
- The debt-to-assets ratio has shown an increasing trend from 0.00 in 2020 to 0.30 in 2024. This suggests that the company's debt level relative to its total assets has been on the rise, reaching 30% by the end of 2024.

2. Debt-to-capital ratio:
- Similarly, the debt-to-capital ratio has also increased steadily over the years, rising from 0.00 in 2020 to 0.40 in 2024. This ratio represents the proportion of the company's capital structure that is funded by debt, showing an increasing reliance on debt financing.

3. Debt-to-equity ratio:
- The debt-to-equity ratio has also exhibited an upward trend, climbing from 0.00 in 2020 to 0.68 in 2024. This ratio indicates the proportion of the company's financing that comes from debt relative to equity, with higher values suggesting higher financial risk.

4. Financial leverage ratio:
- The financial leverage ratio has shown a significant increase from 1.13 in 2020 to 2.25 in 2024. This ratio measures the company's financial leverage or the extent to which it relies on debt to finance its operations. The rising trend indicates a growing reliance on debt, which can increase financial risk.

Overall, the increasing trend in Civitas Resources Inc's solvency ratios, particularly in terms of debt levels relative to assets, capital, and equity, as well as financial leverage, signifies a higher degree of financial risk and potential challenges in meeting long-term obligations. It is crucial for the company to closely manage its debt levels and financial leverage to maintain financial stability and sustainability.

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Coverage ratios

Civitas Resources Inc's interest coverage ratio has shown a positive trend over the past five years. In 2020, the ratio was 22.02, indicating that the company generated 22 times more operating income than the interest expense. This ratio improved further in 2021 to 26.96, reflecting the company's increased ability to cover its interest payments comfortably.

By the end of 2022, Civitas Resources Inc's interest coverage ratio significantly strengthened to 52.36, demonstrating robust financial health and a high capacity to meet interest obligations. However, there was a notable decline in 2023, with the ratio dropping to 6.47, signaling a potential strain on earnings relative to interest payments.

In 2024, the interest coverage ratio decreased even further to 3.37, indicating a concerning decline in the company's ability to cover its interest expenses. This substantial reduction may raise concerns about the company's financial stability and ability to service its debt effectively in the future. Overall, although Civitas Resources Inc's interest coverage ratio has fluctuated over the years, it is essential for stakeholders to monitor this ratio closely to assess the company's financial viability and liquidity position.