CMS Energy Corporation (CMS)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.43 | 0.42 | 0.42 | 0.40 | 0.45 |
| Debt-to-capital ratio | 0.66 | 0.65 | 0.64 | 0.68 | 0.70 |
| Debt-to-equity ratio | 1.92 | 1.87 | 1.82 | 2.14 | 2.38 |
| Financial leverage ratio | 4.44 | 4.47 | 4.34 | 5.40 | 5.35 |
The solvency ratios of CMS Energy Corporation indicate its ability to meet its long-term debt obligations.
The debt-to-assets ratio has shown a gradual increase from 0.43 in 2021 to 0.47 in 2023, which means that 47% of the company's total assets are financed by debt in the most recent year.
Similarly, the debt-to-capital ratio has remained relatively stable around 0.67 over the last three years, suggesting that 67% of the company's capital structure is composed of debt.
The debt-to-equity ratio has fluctuated but generally trended upwards, reaching 2.07 in 2023, indicating that for every dollar of equity, the company has $2.07 of debt.
The financial leverage ratio, measuring the proportion of total assets financed by debt to shareholders' equity, has seen fluctuations and was at 4.44 in 2023. This suggests that the company relies more on debt financing compared to equity.
Overall, while the company's solvency ratios have shown some variability, it is important to monitor these metrics to ensure the company maintains a healthy balance between debt and equity in its capital structure to sustain its long-term financial stability.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.61 | 2.79 | 3.90 | 2.72 | 2.76 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt with its operating profits. A higher interest coverage ratio indicates a company is more capable of servicing its debt.
Over the past five years, CMS Energy Corporation's interest coverage ratio has fluctuated between 2.04 and 2.48. In general, the company has maintained a moderate level of interest coverage, indicating a reasonable ability to cover its interest payments with operating profits.
The slight fluctuations in the interest coverage ratio over the years suggest some variability in the company's ability to generate sufficient operating income to cover its interest expenses. It is important for investors and creditors to monitor this ratio closely to ensure the company can continue to service its debt obligations effectively.