Kinder Morgan Inc (KMI)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.40 | 0.41 | 0.44 | 0.45 | 0.43 |
| Debt-to-capital ratio | 0.48 | 0.48 | 0.50 | 0.51 | 0.49 |
| Debt-to-equity ratio | 0.93 | 0.92 | 1.00 | 1.02 | 0.95 |
| Financial leverage ratio | 2.34 | 2.28 | 2.28 | 2.29 | 2.20 |
The solvency ratios of Kinder Morgan Inc provide valuable insights into the company's financial leverage and ability to meet its long-term debt obligations.
1. Debt-to-assets ratio: This ratio remained relatively stable over the past five years, ranging from 0.45 to 0.48. It indicates that, on average, between 45% and 48% of Kinder Morgan's total assets are funded by debt, with the rest coming from equity.
2. Debt-to-capital ratio: Similar to the debt-to-assets ratio, the debt-to-capital ratio also remained quite consistent, ranging from 0.50 to 0.52. This ratio reflects the proportion of Kinder Morgan's capital structure that is financed by debt, with the rest covered by equity.
3. Debt-to-equity ratio: The debt-to-equity ratio fluctuated between 1.02 and 1.10 over the last five years. This ratio signifies the extent to which the company relies on debt financing in relation to shareholders' equity. A ratio above 1 indicates that the company has more debt than equity in its capital structure.
4. Financial leverage ratio: Kinder Morgan's financial leverage ratio has shown a gradual increase over the period, rising from 2.20 in 2019 to 2.34 in 2023. This ratio measures the company's overall debt levels in relation to its equity, indicating the degree of financial risk and leverage used to finance its operations.
Overall, Kinder Morgan Inc maintains a stable level of debt relative to its assets, capital, and equity, with the financial leverage ratio showing a modest upward trend. Monitoring these solvency ratios is crucial for assessing the company's ability to honor its long-term debt obligations and manage financial risk effectively.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.37 | — | 1.95 | 0.98 | 2.71 |
The interest coverage ratio for Kinder Morgan Inc has exhibited fluctuating trends over the past five years. In 2023, the ratio was 2.83, indicating the company generated operating income 2.83 times greater than its interest expenses for the year. Although this represents a decrease from the prior two years, when the ratios were 3.20 and 3.43 in 2022 and 2021, respectively, the company still maintained a relatively solid ability to cover its interest obligations.
In 2020 and 2019, the interest coverage ratios were 2.68 and 2.24, respectively, showing a slight improvement in 2020 compared to 2019. Overall, the trend suggests some variability in Kinder Morgan Inc's ability to cover its interest payments using its operating income, which could be influenced by changing interest rates, operational performance, or capital structure adjustments.
It would be important to monitor this ratio closely in the future to ensure the company maintains a healthy level of interest coverage to meet its debt obligations effectively and sustainably.