Chesapeake Utilities Corporation (CPK)

The solvency ratios of Chesapeake Utilities Corp over the past five years provide important insights into the company's financial health and ability to meet its long-term obligations.

The debt-to-assets ratio has shown a slight increase from 0.36 in 2019 to 0.42 in 2023 indicating that 42% of the company's total assets are financed by debt, which is within an acceptable range and suggests adequate asset coverage for creditors.

The debt-to-capital ratio has also shown a gradual increase from 0.49 in 2019 to 0.53 in 2023. This ratio reflects the proportion of the company's capital structure that is comprised of debt, now standing at 53%. While this indicates a moderate reliance on debt financing, it is essential to monitor for any potential strain on the company's capital structure.

The debt-to-equity ratio has fluctuated over the years, reaching its peak at 1.31 in 2019 and standing at 1.11 in 2023. This ratio signifies the extent to which the company's operations are funded by debt relative to equity. The current ratio of 1.11 suggests that the company relies slightly more on debt financing than equity, emphasizing the need for maintaining a balance between the two sources of funding.

The financial leverage ratio, a measure of the company's financial risk, has shown a decreasing trend from 3.18 in 2019 to 2.65 in 2023. This ratio indicates the amount of debt used to support the company's assets, with the lower ratio suggesting a more conservative financial structure.

In conclusion, while the solvency ratios of Chesapeake Utilities Corp have exhibited some fluctuations over the years, the overall trend reflects a reasonably stable and adequately leveraged financial position. It is crucial for the company to continue monitoring these ratios to ensure a sustainable and healthy financial structure in the long run.

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Coverage ratios

The interest coverage ratio for Chesapeake Utilities Corp has shown some fluctuation over the past five years, ranging from 4.36 to 6.51. Generally, a higher interest coverage ratio indicates a company's ability to meet its interest obligations, with a ratio above 2 considered financially healthy.

In this case, we observe that Chesapeake Utilities Corp has maintained consistently strong interest coverage ratios above 4 over the period analyzed, which suggests that the company has sufficient earnings to cover its interest expenses. However, the decreasing trend from 6.51 in 2021 to 4.36 in 2023 may signal a potential decrease in the ability to cover interest payments from operating income.

It is important for investors and stakeholders to keep monitoring this trend to ensure that Chesapeake Utilities Corp maintains a healthy interest coverage ratio to meet its debt obligations effectively.