Devon Energy Corporation (DVN)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.28 | 0.23 | 0.26 | 0.31 | 0.43 |
| Debt-to-capital ratio | 0.37 | 0.32 | 0.36 | 0.41 | 0.60 |
| Debt-to-equity ratio | 0.58 | 0.47 | 0.55 | 0.70 | 1.49 |
| Financial leverage ratio | 2.10 | 2.03 | 2.12 | 2.27 | 3.44 |
Devon Energy Corporation's solvency ratios show a consistent improvement over the years. The Debt-to-assets ratio has declined from 0.43 in 2020 to 0.28 in 2024, indicating a reduction in the proportion of assets financed by debt. Similarly, the Debt-to-capital ratio has decreased from 0.60 to 0.37 during the same period, reflecting a lower reliance on debt for funding operations.
The Debt-to-equity ratio has shown a downward trend from 1.49 in 2020 to 0.58 in 2024, suggesting a strengthening of the company's financial structure and a decrease in financial risk. Additionally, the Financial leverage ratio has also decreased from 3.44 in 2020 to 2.10 in 2024, indicating a decrease in the extent of financial leverage used by the company.
Overall, these solvency ratios demonstrate Devon Energy Corporation's improving financial health and reduced vulnerability to financial distress, reflecting effective management of debt levels and capital structure over the years.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 10.13 | 12.95 | 21.35 | 8.21 | -10.95 |
The interest coverage ratio for Devon Energy Corporation has shown significant fluctuations over the past five years. As of December 31, 2020, the ratio was notably negative at -10.95, indicating that the company's operating income was insufficient to cover its interest expenses.
However, there was a considerable improvement in the company's financial position by December 31, 2021, with the interest coverage ratio increasing to 8.21. This suggests Devon Energy was better able to meet its interest obligations from its operating earnings.
By December 31, 2022, the interest coverage ratio surged to 21.35, signaling a substantial enhancement in the company's ability to cover its interest payments. This indicates Devon Energy had a comfortable buffer to meet its interest expenses from its operating profits.
In the following years, while the interest coverage ratio slightly decreased to 12.95 by December 31, 2023, and further to 10.13 by December 31, 2024, the ratios still remained at healthy levels, indicating that Devon Energy continued to generate sufficient operating income to cover its interest costs.
Overall, the trends in Devon Energy Corporation's interest coverage ratio reflect positive developments in the company's ability to manage its interest obligations and suggest a strengthening financial position in recent years.