Civitas Resources Inc (CIVI)

Civitas Resources Inc's solvency ratios provide insight into the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio:
- Civitas Resources Inc's debt-to-assets ratio has been relatively stable over the past few years, ranging from 0.00 to 0.34.
- A lower debt-to-assets ratio indicates that the company has a lower level of debt relative to its total assets, which can be seen as a positive sign of solvency.
- However, the ratio increased significantly in the most recent quarter, reaching 0.30, suggesting a higher reliance on debt to finance its operations.

2. Debt-to-capital ratio:
- The trend in Civitas Resources Inc's debt-to-capital ratio follows a similar pattern to the debt-to-assets ratio, with fluctuations between 0.00 and 0.44.
- The ratio increased notably in recent quarters, reaching 0.43 and 0.42, indicating a higher proportion of debt in the company's capital structure.
- A higher debt-to-capital ratio suggests increased financial risk and potential challenges in servicing debt obligations.

3. Debt-to-equity ratio:
- The debt-to-equity ratio for Civitas Resources Inc has also shown fluctuations, ranging from 0.00 to 0.77.
- Similar to the other solvency ratios, there was a significant increase in the ratio in recent quarters, reaching 0.74 and 0.73.
- A higher debt-to-equity ratio implies that the company is using more debt to finance its operations compared to equity, which may indicate higher financial leverage and risk.

4. Financial leverage ratio:
- Civitas Resources Inc's financial leverage ratio has been increasing steadily over the past few years, reaching 2.25 in the most recent quarter.
- A rising financial leverage ratio indicates that the company is relying more on debt to support its operations, which could potentially lead to challenges in repaying debt in the future.
- An increasing financial leverage ratio may raise concerns about the company's overall solvency and financial health.

In conclusion, while Civitas Resources Inc has maintained relatively stable solvency ratios in the past, the recent increase in these ratios signals a higher reliance on debt and potentially increased financial risk. It would be essential for the company to monitor and manage its debt levels effectively to ensure sustainable long-term solvency.

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Coverage ratios

Civitas Resources Inc's interest coverage ratio has displayed fluctuating trends over the quarters analyzed. The interest coverage ratio measures the company's ability to meet its interest obligations with its operating income.

From March 31, 2020, to June 30, 2022, the interest coverage ratio generally remained at healthy levels, indicating the company had sufficient earnings to cover its interest expenses. However, there were some quarters where the ratio dropped significantly, like in March 31, 2021 and June 30, 2021, showing potential challenges in meeting interest payments from operating income alone.

The ratios improved again from September 30, 2022, to March 31, 2024, demonstrating a recovery in the company's ability to cover its interest expenses comfortably.

By December 31, 2024, the interest coverage ratio turned negative, indicating a potential strain on the company's ability to meet interest obligations with its current level of operating income. This may raise concerns about the company's financial health and its ability to manage its debt effectively, warranting further investigation into its financial position and performance.