CMS Energy Corporation (CMS)

Solvency ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Debt-to-assets ratio 0.42 0.45 0.43 0.44 0.43 0.43 0.43 0.41 0.42 0.42 0.40 0.42 0.42 0.39 0.39 0.46 0.40 0.45 0.47 0.46
Debt-to-capital ratio 0.65 0.66 0.65 0.65 0.66 0.66 0.66 0.65 0.65 0.65 0.63 0.64 0.64 0.66 0.67 0.70 0.68 0.71 0.72 0.71
Debt-to-equity ratio 1.85 1.92 1.86 1.88 1.92 1.96 1.95 1.83 1.87 1.83 1.70 1.76 1.82 1.97 2.02 2.37 2.14 2.50 2.57 2.42
Financial leverage ratio 4.36 4.29 4.29 4.27 4.44 4.52 4.52 4.43 4.47 4.39 4.22 4.19 4.34 5.01 5.17 5.19 5.40 5.50 5.48 5.29

The solvency ratios of CMS Energy Corporation demonstrate the company's ability to meet its long-term financial obligations.

1. Debt-to-assets ratio: This ratio indicates the proportion of a company's assets that are financed through debt. The trend shows that the debt-to-assets ratio fluctuated between 0.39 to 0.47 over the past few years, with a slight decrease towards the end of the period. Overall, the company seems to have maintained a stable level of debt in relation to its assets.

2. Debt-to-capital ratio: This ratio reflects the percentage of a company's capital that is financed through debt. The data suggests that the debt-to-capital ratio remained relatively consistent, ranging from 0.63 to 0.72, indicating that the company has been able to balance its use of debt in its capital structure.

3. Debt-to-equity ratio: The debt-to-equity ratio measures the proportion of a company's equity that is financed through debt. CMS Energy Corporation has shown a downward trend in this ratio over the period, with values dropping from 2.57 to 1.85. This indicates a decreasing reliance on debt to fund its operations, which may reflect a stronger equity position.

4. Financial leverage ratio: This ratio evaluates the extent to which a company relies on debt in its capital structure. The data reveals a declining trend in the financial leverage ratio, moving from 5.48 to 4.36. A decreasing ratio suggests that the company has been reducing its financial risk by decreasing its reliance on debt financing.

In conclusion, the solvency ratios of CMS Energy Corporation indicate a prudent management of debt levels, with a controlled use of debt to finance its operations. The decreasing trend in the debt-to-equity and financial leverage ratios signals an improvement in the company's financial position and risk management practices over the analyzed period.

Coverage ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Interest coverage 2.32 2.51 2.51 2.70 2.61 2.40 2.47 2.42 2.79 3.73 3.82 3.90 3.90 2.97 3.04 2.96 2.68 2.87 2.84 2.72

Interest coverage is a financial ratio that indicates a company's ability to pay interest expenses on its outstanding debt. A higher interest coverage ratio suggests that the company is better positioned to meet its interest obligations.

For CMS Energy Corporation, the interest coverage ratio has fluctuated over the periods. As of December 31, 2021, the interest coverage ratio stood at 3.90, indicating that the company generated 3.90 times the earnings needed to cover its interest expenses. This signifies a healthy interest coverage level, providing a good buffer against potential financial difficulties.

Following December 2021, the interest coverage ratio remained relatively stable, hovering between 3.82 and 2.40 up to December 31, 2024. Although there were fluctuations, the company generally maintained a moderate to adequate level of interest coverage during these periods.

The occasional dips in the interest coverage ratio should be monitored, as declining ratios may indicate a higher risk of default on debt obligations. Overall, maintaining a sufficient interest coverage ratio is crucial for ensuring financial stability and demonstrating the company's ability to manage its debt effectively.