H2O America (HTO)

The solvency ratios of H2O America indicate a distinctive financial structure characterized by an absence of leverage in terms of debt obligations. Specifically, the debt-to-assets ratio remains at 0.00 for each year from December 31, 2020, through December 31, 2024, suggesting that the company has not reported any liabilities relative to its total assets during this period. Similarly, the debt-to-capital ratio is consistently zero across the same timeframe, indicating no proportion of debt in the company's capital structure. The debt-to-equity ratio also remains at 0.00 throughout, reinforcing the absence of leverage derived from debt relative to shareholders’ equity.

In contrast, the financial leverage ratio, which measures the extent to which a company’s assets are financed through equity and debt, displays values well above 1.0 across all periods. This ratio varies from 3.38 to 3.61, with a slight decline observed in 2021 and 2022 before a modest increase in 2023, and a slight decrease again in 2024. The elevated levels of the financial leverage ratio, despite no reported debt, imply that other forms of financing or operational structures contribute to the company’s leverage profile. It could also suggest that the ratio is influenced by non-debt liabilities or a high level of retained earnings relative to debt.

Overall, the data indicates that H2O America operates without leverage in terms of traditional debt instruments, as evidenced by the zero debt ratios throughout the period. Nonetheless, the consistently high financial leverage ratio warrants further investigation into the company's capital structure components beyond conventional debt, such as equity financing, operational leverage, or other liabilities that might impact its financial risk profile.

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Coverage ratios

The interest coverage ratio for H2O America demonstrates a relatively stable capacity to meet its interest obligations over the period from December 31, 2020, to December 31, 2024. Specifically, the ratio was 2.29 in 2020, marginally decreasing to 2.27 in 2021, indicating a slight decline but overall stability in the company's ability to cover interest expenses. In 2022, the ratio increased to 2.42, reflecting an improvement in interest coverage, which may suggest enhanced earnings or reduced interest expenses. The subsequent years see the ratio slightly decrease to 2.37 in 2023 and then increase again to 2.44 in 2024, indicating minor fluctuations but a general trend of maintained or slightly improved coverage levels.

This pattern indicates that H2O America consistently generates earnings sufficient to cover its interest expenses approximately two and a quarter to two and a half times, implying moderate but steady buffer for interest payment risks. The slight upward trend toward 2024 suggests a gradual strengthening of the company's ability to meet its interest obligations, contributing positively to its financial stability and credit profile. Overall, the interest coverage ratios reflect a stable financial position with manageable interest-related risks across the analyzed period.