Enphase Energy Inc (ENPH)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.38 | 0.39 | 0.46 | 0.00 | 0.14 |
| Debt-to-capital ratio | 0.57 | 0.59 | 0.69 | 0.01 | 0.27 |
| Debt-to-equity ratio | 1.32 | 1.45 | 2.21 | 0.01 | 0.38 |
| Financial leverage ratio | 3.44 | 3.74 | 4.83 | 2.48 | 2.62 |
Solvency ratios provide insight into a company's ability to meet its long-term financial obligations. Looking at the solvency ratios of Enphase Energy Inc over the past five years, we observe the following trends:
1. Debt-to-assets ratio: The ratio decreased from 0.50 in 2021 to 0.38 in 2023, indicating that the company has been able to reduce its debt relative to its total assets over the period. This suggests a stronger financial position and less reliance on debt financing.
2. Debt-to-capital ratio: The ratio also declined from 0.71 in 2021 to 0.57 in 2023, showing a similar trend of decreasing reliance on debt to finance its operations and investments.
3. Debt-to-equity ratio: Enphase Energy's debt-to-equity ratio decreased from 2.41 in 2021 to 1.32 in 2023. This reduction indicates a positive shift towards a more balanced capital structure with a lower level of debt relative to equity.
4. Financial leverage ratio: The financial leverage ratio dropped from 4.83 in 2021 to 3.44 in 2023. This indicates that Enphase Energy has decreased its reliance on debt financing to fund its operations and investments, resulting in a more stable capital structure.
Overall, the declining trend in all the solvency ratios suggests that Enphase Energy Inc has been effectively managing its debt levels and improving its financial solvency over the past few years. This may indicate a stronger ability to weather financial challenges and meet its long-term obligations efficiently.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 59.05 | 48.90 | 3.68 | 6.69 | 10.30 |
The interest coverage ratio measures a company's ability to cover its interest payments with its operating income. Enphase Energy Inc's interest coverage ratio has shown a declining trend over the years, from 14.67 in 2019 to 4.85 in 2021. The lack of data for 2020 and 2023 indicates potential reporting issues or fluctuations in financial performance.
A higher interest coverage ratio is generally preferred as it demonstrates that a company is more capable of meeting its interest obligations. The decreasing trend in Enphase Energy Inc's interest coverage ratio may suggest a decreased ability to cover its interest payments in recent years, which could indicate heightened financial risk and potential challenges in meeting debt obligations. It would be prudent for stakeholders and investors to closely monitor Enphase Energy Inc's financial health and management of its debt levels.