IDACORP Inc (IDA)

Idacorp, Inc.'s solvency ratios provide insight into the company's ability to meet its long-term debt obligations and the extent to which it relies on debt financing. Here is a detailed analysis based on the provided data:

1. Debt-to-assets ratio:
The debt-to-assets ratio for Idacorp, Inc. has shown a gradual increase over the years, reaching 0.33 in 2023. This suggests that 33% of the company's total assets are funded by debt. While the ratio has increased slightly, it remains at a reasonable level, indicating that the company has a strong asset base relative to its debt obligations.

2. Debt-to-capital ratio:
The debt-to-capital ratio has also shown an increasing trend, reaching 0.49 in 2023. This ratio indicates that 49% of Idacorp's capital structure is comprised of debt, with the remaining 51% funded by equity. The increase in this ratio suggests a higher reliance on debt financing, which may lead to increased financial risk if not managed effectively.

3. Debt-to-equity ratio:
The debt-to-equity ratio for Idacorp, Inc. has experienced fluctuations but has generally increased over the years, reaching 0.97 in 2023. This ratio indicates that the company's total debt is almost equal to its total equity, implying a high level of financial leverage. A higher debt-to-equity ratio may signal that the company is more vulnerable to economic downturns and interest rate fluctuations.

4. Financial leverage ratio:
The financial leverage ratio, which measures the company's overall leverage, increased to 2.92 in 2023. This ratio indicates that Idacorp's assets are funded almost three times over by a combination of debt and equity. A higher financial leverage ratio suggests a higher level of financial risk and may indicate the potential for financial distress if earnings decline or interest rates rise.

In conclusion, while Idacorp, Inc. has shown stable solvency ratios over the years, there are indications of increasing reliance on debt financing. The company should carefully monitor and manage its debt levels to ensure it maintains a healthy balance between debt and equity to support long-term financial stability and growth.

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Coverage ratios

Interest coverage is a crucial financial ratio that indicates a company's ability to meet its interest obligations on its outstanding debt. Idacorp, Inc.'s interest coverage ratio has exhibited some fluctuations over the past five years.

The trend in Idacorp's interest coverage ratio from 2019 to 2023 shows a slight decline in the company's ability to cover its interest expenses. In 2019, the ratio stood at a relatively healthy 3.20, indicating that the company's operating income was 3.20 times its interest expense. However, the ratio gradually decreased to 2.44 by the end of 2023, reflecting a decrease in the company's ability to cover its interest costs over the period.

While a ratio above 1 suggests that the company is generating sufficient operating income to cover its interest payments, a declining trend like the one observed for Idacorp raises some concerns. A decreasing interest coverage ratio could signal that the company is becoming less capable of servicing its debt obligations from its operating profits, which might indicate potential financial strain or decreasing profitability.

It is important for investors and creditors to monitor Idacorp's interest coverage ratio closely in the coming periods to assess any further deterioration in the company's ability to meet its interest obligations and manage its debt effectively.