Entergy Corporation (ETR)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 4.30 | 4.07 | 4.51 | 5.11 | 5.33 |
Entergy Corporation's solvency ratios, based on the provided data, indicate a consistently strong financial position in terms of debt management and leverage.
The Debt-to-assets ratio remains at 0.00 throughout the years specified, suggesting that the company has no significant reliance on debt to finance its assets, which is a positive indication of financial stability.
Similarly, the Debt-to-capital ratio and the Debt-to-equity ratio also stand at 0.00 across the years, reinforcing the low debt levels relative to the company's capital and equity. This reflects a conservative approach to financial leverage and risk management.
The Financial leverage ratio shows a decreasing trend from 5.33 in 2020 to 4.30 in 2024. This indicates that the company is gradually reducing its reliance on debt to support its operations and investments, which can enhance financial flexibility and resilience.
Overall, the solvency ratios of Entergy Corporation demonstrate prudent financial management practices, with a minimal debt burden in relation to its assets, capital, and equity, along with a decreasing trend in financial leverage over the years.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 2.20 | 2.66 | 1.99 | 2.57 | 2.64 |
Interest coverage is a crucial financial ratio that measures a company's ability to meet its interest obligations on its outstanding debt. Looking at the data provided for Entergy Corporation, we observe a fluctuating trend in its interest coverage ratio over the past five years.
As of December 31, 2020, Entergy Corporation had an interest coverage ratio of 2.64, indicating that the company generated 2.64 times the earnings needed to cover its interest expenses. However, by December 31, 2021, this ratio slightly decreased to 2.57, suggesting a slight decrease in the company's ability to cover its interest payments.
In the subsequent years, there is further variation in Entergy Corporation's interest coverage ratio. By December 31, 2022, the ratio dropped to 1.99, indicating a potential increase in the company's financial risk as it may struggle to cover its interest obligations. This decrease could be a concern for creditors and investors as it signifies a lower buffer for meeting interest expenses.
Despite the drop in the ratio in 2022, there was an improvement by December 31, 2023, with the interest coverage ratio rising to 2.66. This indicates a positive trend, suggesting the company's ability to meet its interest payments improved, providing a stronger cushion against default risk.
However, by December 31, 2024, the interest coverage ratio decreased once again to 2.20, signaling that Entergy Corporation might be experiencing challenges in generating sufficient earnings to cover its interest expenses.
In conclusion, the fluctuating trend in Entergy Corporation's interest coverage ratio over the past five years reveals varying levels of the company's ability to cover its interest obligations. It is important for stakeholders to monitor this ratio closely as it provides insights into the company's financial health and risk of default.