MGE Energy Inc (MGEE)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.27 | 0.23 | 0.26 | 0.23 | 0.25 |
| Debt-to-capital ratio | 0.39 | 0.35 | 0.37 | 0.35 | 0.38 |
| Debt-to-equity ratio | 0.63 | 0.54 | 0.60 | 0.53 | 0.61 |
| Financial leverage ratio | 2.35 | 2.33 | 2.31 | 2.31 | 2.43 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Analyzing MGE Energy Inc's solvency ratios over the past five years, we observe the following trends:
1. Debt-to-Assets Ratio: This ratio measures the proportion of assets financed by debt. MGE Energy Inc's debt-to-assets ratio has increased slightly over the past three years, from 0.23 in 2021 to 0.27 in 2023. This indicates that a higher percentage of the company's assets are being funded by debt.
2. Debt-to-Capital Ratio: The debt-to-capital ratio shows the percentage of a company's capital that is provided by debt. MGE Energy Inc's debt-to-capital ratio has also experienced a gradual increase from 0.35 in 2022 to 0.39 in 2023. This suggests a higher reliance on debt to finance the company's operations.
3. Debt-to-Equity Ratio: The debt-to-equity ratio indicates the proportion of equity and debt in a company's capital structure. MGE Energy Inc's debt-to-equity ratio has fluctuated over the past five years but shows an overall increasing trend. In 2023, the ratio stands at 0.63, indicating that the company has a higher level of debt relative to equity.
4. Financial Leverage Ratio: The financial leverage ratio measures the extent to which a company uses debt to finance its operations. MGE Energy Inc's financial leverage ratio has remained relatively stable over the past five years, ranging from 2.31 to 2.43. This suggests that the company's level of financial risk has been consistent.
In summary, MGE Energy Inc's solvency ratios indicate a gradual increase in its reliance on debt for financing its operations. While the company's financial leverage ratio has been stable, it is important to monitor the increasing trend in debt-to-assets, debt-to-capital, and debt-to-equity ratios as it may impact the company's financial stability and risk profile in the long term.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 263.28 | 183.17 | 152.13 | 140.30 | 140.04 |
Based on the data provided, MGE Energy Inc's interest coverage ratio has exhibited a positive trend over the past five years. The interest coverage ratio measures the company's ability to meet its interest payment obligations, with higher values indicating a stronger ability to cover interest expenses.
In 2023, the interest coverage ratio stands at a robust 263.28, a significant increase from the previous year's ratio of 183.17. This suggests that MGE Energy Inc generated more than sufficient operating income to cover its interest expenses in 2023. The company's interest coverage ratio has been consistently strong over the past five years, with values well above 1 indicating a healthy financial position.
Overall, the increasing trend in MGE Energy Inc's interest coverage ratio signifies that the company has been effectively managing its interest obligations and generating strong operating income relative to its interest expenses. This indicates a positive financial health and stability for the company in terms of debt servicing capacity.