CMS Energy Corporation (CMS)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.42 | 0.43 | 0.42 | 0.42 | 0.40 |
| Debt-to-capital ratio | 0.65 | 0.66 | 0.65 | 0.64 | 0.68 |
| Debt-to-equity ratio | 1.85 | 1.92 | 1.87 | 1.82 | 2.14 |
| Financial leverage ratio | 4.36 | 4.44 | 4.47 | 4.34 | 5.40 |
The solvency ratios of CMS Energy Corporation have shown a consistent trend over the five-year period from 2020 to 2024.
The Debt-to-assets ratio has gradually increased from 0.40 in 2020 to 0.42 in 2024, indicating a slight increase in the proportion of the company's assets financed by debt.
The Debt-to-capital ratio has fluctuated within a narrow range, with a slight decrease from 0.68 in 2020 to 0.65 in 2024. This ratio suggests that debt accounts for around 65% of the company's capital structure in recent years.
The Debt-to-equity ratio has decreased from 2.14 in 2020 to 1.85 in 2024, signaling a reduction in the level of debt relative to equity in the company's capitalization.
The Financial leverage ratio has also displayed a downward trend, declining from 5.40 in 2020 to 4.36 in 2024. This indicates a decrease in the company's financial leverage over the years.
Overall, CMS Energy Corporation has maintained a stable solvency position with moderate levels of debt relative to assets, capital, and equity, alongside a decreasing trend in financial leverage, reflecting a prudent approach to managing its financial obligations.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.18 | 2.61 | 2.79 | 3.90 | 2.72 |
The interest coverage ratio for CMS Energy Corporation has shown some fluctuations over the past five years.
As of December 31, 2020, the interest coverage ratio was 2.72, indicating that the company generated $2.72 in operating income for every dollar of interest expense.
By December 31, 2021, the interest coverage ratio had improved to 3.90, reflecting a stronger ability to cover interest payments with operating income.
However, in the following years, the interest coverage ratio declined. By December 31, 2022, it stood at 2.79, dropping further to 2.61 by December 31, 2023, and reaching 2.18 by December 31, 2024.
These fluctuations in the interest coverage ratio suggest that while CMS Energy Corporation was initially able to cover its interest obligations comfortably, there may have been challenges in maintaining that level of coverage in the subsequent years. It is important for the company to closely monitor and manage its interest obligations to ensure financial stability and avoid potential liquidity issues.