Devon Energy Corporation (DVN)
Solvency ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.23 | 0.23 | 0.26 | 0.26 | 0.26 | 0.26 | 0.28 | 0.30 | 0.31 | 0.31 | 0.32 | 0.34 | 0.43 | 0.42 | 0.41 | 0.39 | 0.31 | 0.30 | 0.26 | 0.32 |
| Debt-to-capital ratio | 0.32 | 0.33 | 0.36 | 0.36 | 0.36 | 0.36 | 0.39 | 0.41 | 0.41 | 0.42 | 0.44 | 0.46 | 0.60 | 0.59 | 0.57 | 0.52 | 0.43 | 0.40 | 0.38 | 0.42 |
| Debt-to-equity ratio | 0.47 | 0.49 | 0.56 | 0.56 | 0.55 | 0.57 | 0.64 | 0.70 | 0.70 | 0.73 | 0.77 | 0.84 | 1.49 | 1.42 | 1.33 | 1.10 | 0.74 | 0.66 | 0.61 | 0.74 |
| Financial leverage ratio | 2.03 | 2.08 | 2.12 | 2.13 | 2.12 | 2.17 | 2.30 | 2.34 | 2.27 | 2.36 | 2.39 | 2.45 | 3.44 | 3.42 | 3.21 | 2.84 | 2.36 | 2.20 | 2.38 | 2.30 |
Devon Energy Corp.'s solvency ratios, as depicted by the debt-to-assets, debt-to-capital, debt-to-equity, and financial leverage ratios, provide insights into the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing.
The debt-to-assets ratio for Devon Energy Corp. has shown a fluctuating trend over the quarters, ranging from 0.26 to 0.31. This ratio suggests that, on average, around 26% to 31% of the company's total assets are financed by debt. The lower the ratio, the less the company relies on debt to fund its operations.
The debt-to-capital ratio, which combines both debt and equity financing, has also varied over the periods, from 0.35 to 0.42. This ratio indicates the proportion of the company's capital that comes from debt. Thus, Devon Energy Corp. has been maintaining a debt-to-capital ratio of around 35% to 42%, indicating a moderate level of debt relative to its total capital structure.
The debt-to-equity ratio for Devon Energy Corp. portrays a similar pattern as the previous ratios, fluctuating between 0.53 and 0.72. This ratio signifies the amount of leverage used by the company relative to shareholders' equity, with values between 0.53 and 0.72 indicating that the company has been relying more on debt to finance its operations than equity.
The financial leverage ratio, standing between 2.03 and 2.34, shows how many times the company's assets cover its equity. A higher financial leverage ratio reflects higher financial risk as more debt is being used to finance the company's assets. Therefore, Devon Energy Corp. has been operating with a higher level of financial leverage, which magnifies the impact of potential losses on shareholder equity.
In conclusion, based on the solvency ratios analyzed, Devon Energy Corp. has been maintaining a moderate level of debt relative to its assets, capital, and equity. However, the company's increasing trend in some of these ratios over the quarters signifies a rising proportion of debt in its capital structure, which could potentially increase its financial risk and impact its overall solvency position.
Coverage ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest coverage | 12.95 | 13.22 | 16.88 | 21.19 | 21.35 | 21.68 | 17.69 | 11.80 | 8.21 | 3.92 | 0.83 | -2.32 | -10.95 | -13.36 | -11.90 | -7.23 | -0.38 | 7.27 | 13.97 | 9.89 |
The interest coverage ratio measures a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates a stronger financial position as the company's earnings are more than sufficient to cover its interest expenses.
For Devon Energy Corp., we can observe a generally strong trend in the interest coverage ratio over the past eight quarters. The ratio has consistently been well above 1, which implies that the company's operating income is significantly higher than its interest expenses.
In Q1 2023, Devon Energy Corp. had an interest coverage ratio of 26.99, indicating a robust ability to cover its interest payments. This ratio was maintained at a high level compared to the previous quarters, with Q4 2022 showing an interest coverage of 25.63 and Q3 2022 at 27.69.
Overall, the trend in the interest coverage ratio for Devon Energy Corp. demonstrates a stable and strong financial position with ample earnings to comfortably meet its interest obligations. This consistency suggests that the company has a healthy balance sheet and is effectively managing its debt obligations.