Civitas Resources Inc (CIVI)

Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Civitas Resources Inc's solvency ratios exhibit fluctuations over the past five years.

The debt-to-assets ratio, a measure of the proportion of assets financed by debt, has increased significantly from 0.07 in 2021 to 0.34 in 2023, indicating that the company has taken on more debt relative to its total assets. This may suggest a higher level of financial risk.

The debt-to-capital ratio, which assesses the extent of a company's capital structure that is financed by debt, also saw a notable rise from 0.10 in 2021 to 0.44 in 2023. A higher debt-to-capital ratio implies a greater reliance on debt to fund operations and investments.

The debt-to-equity ratio, indicating the proportion of equity and debt used to finance the company's assets, surged to 0.77 in 2023 from 0.11 in 2021. This increase suggests a higher financial leverage and potential strain on the company's equity position.

The financial leverage ratio, which measures the company's financial risk due to debt, increased steadily from 1.29 in 2019 to 2.28 in 2023. This indicates that Civitas Resources Inc's financial risk has increased over the years as it relies more on debt financing.

Overall, the trend in Civitas Resources Inc's solvency ratios demonstrates a growing reliance on debt to finance its operations and investments, resulting in higher financial risks and potential challenges in meeting long-term obligations. Investors and stakeholders should closely monitor the company's debt management strategies and financial health to assess its ability to navigate future challenges.

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Coverage ratios

The interest coverage ratio of Civitas Resources Inc has shown some fluctuation over the past five years. In 2023, the interest coverage ratio was 6.70, indicating that the company's operating income was able to cover its interest expenses approximately 6.70 times. This ratio has decreased significantly compared to 2022 when it was 62.94, suggesting a potential decline in the company's ability to meet its interest obligations from its operating income.

While the 2023 ratio is lower than in the previous year, it is still higher than in 2021 and 2020, where the interest coverage ratios were 43.60 and 16.08, respectively. This implies that in those years, Civitas Resources Inc had less flexibility to cover its interest expenses with its operating income.

Comparing the 2023 ratio to 2019, when the interest coverage was 44.06, we can see a decline in financial strength as the company's ability to cover interest expenses has decreased over the years.

Overall, the trend in Civitas Resources Inc's interest coverage ratio indicates some variability in its financial performance in managing its interest obligations, highlighting the importance of monitoring the company's operating income and interest expenses closely.