Eversource Energy (ES)

Solvency ratios provide insight into a company's ability to meet its long-term financial obligations. Eversource Energy's solvency ratios have shown a general upward trend over the past five years, indicating an increase in its reliance on debt compared to its assets, capital, and equity.

The debt-to-assets ratio, which measures the proportion of the company's assets financed by debt, has increased steadily from 0.38 in 2019 to 0.48 in 2023. This suggests that Eversource Energy has been increasingly using debt to fund its operations and investments over the years.

Similarly, the debt-to-capital ratio, which reveals the extent to which debt is used to finance the company's operations and growth, has risen from 0.55 in 2019 to 0.65 in 2023. This indicates that a larger portion of Eversource Energy's capital structure is composed of debt.

The debt-to-equity ratio, which shows the amount of debt relative to shareholders' equity, has also shown an upward trend, increasing from 1.23 in 2019 to 1.89 in 2023. This signifies that Eversource Energy's debt levels have been growing at a faster pace than its equity, potentially raising concerns about the company's financial risk and leverage.

The financial leverage ratio, which measures the company's total assets relative to shareholders' equity, has also been on the rise, climbing from 3.26 in 2019 to 3.92 in 2023. This indicates that Eversource Energy's assets are increasingly funded by debt compared to equity, which could expose the company to higher financial risk in the long run.

In conclusion, Eversource Energy's solvency ratios have been trending upwards, showing a greater reliance on debt financing. This highlights the importance of monitoring the company's debt levels and assessing the potential impact on its financial stability and risk profile.

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Coverage ratios

The interest coverage ratio of Eversource Energy has displayed a declining trend over the past five years, dropping from 3.51 in 2019 to 2.82 in 2023. This indicates that the company's ability to cover its interest expenses with operating income has weakened over time. Even though the ratio remains above 1, which implies that the company is generating enough operating income to cover its interest expenses, the decreasing trend may raise concerns about the company's financial health and its ability to service its debt obligations comfortably. It would be prudent for stakeholders to closely monitor this trend and assess the factors contributing to the decline in the interest coverage ratio.