CenterPoint Energy Inc (CNP)

Solvency ratios provide insight into Centerpoint Energy Inc.'s ability to meet its long-term debt obligations. The debt-to-assets ratio has been gradually increasing over the past five years, reaching 0.48 in 2023 from 0.45 in 2019. This indicates that Centerpoint Energy relies more on debt to finance its assets.

Similarly, the debt-to-capital ratio has also shown an increasing trend, reaching 0.67 in 2023 from 0.66 in 2019. This implies that a higher proportion of Centerpoint Energy's capital structure is financed by debt.

The debt-to-equity ratio has fluctuated over the years but has generally been on an upward trajectory, standing at 1.99 in 2023 compared to 1.91 in 2019. This signifies an increasing reliance on debt relative to equity in the company's capital structure.

Lastly, the financial leverage ratio has also been on the rise, reaching 4.11 in 2023 from 4.24 in 2019. This indicates that Centerpoint Energy's financial leverage, or the proportion of debt in its capital structure, has been increasing over the years.

Overall, these solvency ratios suggest that Centerpoint Energy Inc. is becoming more leveraged over time, which can pose risks in terms of meeting its long-term debt obligations and financial stability. Investors and stakeholders should closely monitor these ratios to assess the company's financial health and risk profile.

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Coverage ratios

Centerpoint Energy Inc.'s interest coverage ratio, which measures the company's ability to pay its interest expenses from its operating income, has shown a fluctuating trend over the past five years.

In 2023, the interest coverage ratio stands at a healthy 103.53, indicating that the company generated operating income over 103 times higher than its interest expenses during the period. This suggests that Centerpoint Energy Inc. has a comfortable margin to cover its interest obligations.

The interest coverage ratio improved significantly from 2020 to 2022, reaching a peak of 120.46 in 2022, which indicates a strong ability to meet interest payments. However, it dropped from 2022 to 2023, although it still remains at a satisfactory level.

It is worth noting that in 2020, the interest coverage ratio was negative (-0.39), implying that the company's operating income was not sufficient to cover its interest expenses during that period. This may have raised concerns about the company's financial health at that time.

Overall, the recent improvement in Centerpoint Energy Inc.'s interest coverage ratio indicates a more stable financial position, but it is important for the company to continue monitoring and managing its interest expenses to ensure sustainable performance in the long run.