Middlesex Water Company (MSEX)

Middlesex Water Co.'s solvency ratios provide insights into the company's ability to meet its long-term financial obligations.

The Debt-to-assets ratio has shown a fluctuating trend over the past five years, ranging from 0.28 in 2019 to 0.34 in 2022, with a current value of 0.33. This ratio indicates that approximately 33% of the company's total assets are financed through debt, with a decreasing trend in recent years.

The Debt-to-capital ratio has also been on the rise, increasing from 0.44 in 2019 to 0.49 in 2023. This suggests that debt accounts for around 49% of the company's capital structure, which includes both debt and equity. An increasing trend in this ratio may signify a higher reliance on debt financing.

The Debt-to-equity ratio indicates how much of the company's assets are funded through equity compared to debt. Middlesex Water Co.'s Debt-to-equity ratio has increased from 0.79 in 2019 to 0.96 in 2023, signaling a higher proportion of debt in the capital structure compared to equity. This rising trend may raise concerns about indebtedness.

The Financial leverage ratio, which measures the proportion of assets financed by debt relative to equity, has shown fluctuations over the years, with a peak at 2.91 in 2023. This ratio implies that for every dollar of equity, the company has approximately $2.91 of debt. A higher financial leverage ratio can indicate higher financial risk and interest rate sensitivity.

In conclusion, Middlesex Water Co.'s solvency ratios reflect a mixed picture of its financial health, with some ratios showing an increasing trend towards higher indebtedness, while others fluctuate. It is crucial for investors and stakeholders to closely monitor these ratios to gauge the company's ability to manage its long-term debt obligations.

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Coverage ratios

The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates that the company is more capable of meeting its interest obligations.

Looking at the trend for Middlesex Water Co.'s interest coverage ratio over the past five years, we observe a fluctuating pattern. The ratio decreased from 4.89 in 2019 to 4.99 in 2020, indicating a slight improvement in covering interest expenses. However, the ratio declined in the following years to 4.09 in 2021 and further to 2.98 in 2023, suggesting a reduced ability to cover interest payments compared to the previous years.

The decreasing trend in interest coverage could raise concerns about the company's ability to meet its interest obligations with its operating income. It is important for investors and stakeholders to closely monitor this ratio and the company's financial health to assess its ability to manage its debt effectively in the future.