Magnolia Oil & Gas Corp (MGY)

The solvency ratios of Magnolia Oil & Gas Corp demonstrate an improving financial position over the years.

The Debt-to-assets ratio has decreased from 0.27 in 2020 to 0.14 in 2024, indicating that the company has been reducing its dependency on debt to finance its assets, which is a positive sign for solvency.

Similarly, the Debt-to-capital ratio has also shown a decreasing trend from 0.42 in 2020 to 0.17 in 2024, revealing that the company has gradually reduced its debt in relation to its total capital structure.

The Debt-to-equity ratio has declined significantly from 0.71 in 2020 to 0.21 in 2024, depicting a decreasing reliance on debt as a source of financing relative to equity.

Furthermore, the Financial leverage ratio has reduced consistently from 2.65 in 2020 to 1.47 in 2024, indicating that the company's reliance on debt financing has decreased, leading to a stronger financial position.

Overall, the declining trend in these solvency ratios over the years reflects Magnolia Oil & Gas Corp's efforts to strengthen its financial health and reduce its risk of default, showing improved solvency and stability in its operations.

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Coverage ratios

Interest coverage ratio is an important financial metric that reflects a company's ability to meet its interest obligations with its operating income. A higher interest coverage ratio indicates that the company is more capable of servicing its debt obligations.

Analysis of Magnolia Oil & Gas Corp's interest coverage over the years shows a significant improvement in its ability to cover interest expenses. As of December 31, 2020, the interest coverage ratio was reported at -530.78, indicating a concerning level as the operating income was insufficient to cover interest expenses.

However, there has been a positive turnaround in the subsequent years, with the interest coverage ratio improving to 140.46 as of December 31, 2021, and further increasing to 183.43 by December 31, 2022. This improvement suggests that the company's operating income has increased sufficiently to cover its interest expenses.

Although there was a slight decrease in the interest coverage ratio to 125.58 by December 31, 2023, and further to 114.82 by December 31, 2024, the ratios still remain above 1, indicating that Magnolia Oil & Gas Corp continues to generate enough operating income to comfortably meet its interest obligations.

Overall, the trend in Magnolia Oil & Gas Corp's interest coverage ratio demonstrates a positive trajectory, showcasing an enhanced ability to manage and service its debt in the recent years.