Murphy Oil Corporation (MUR)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.28 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.41 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.71 | 0.00 |
| Financial leverage ratio | 1.82 | 2.06 | 2.48 | 2.52 | 2.14 |
The solvency ratios of Murphy Oil Corp., as indicated by the debt-to-assets ratio, debt-to-capital ratio, debt-to-equity ratio, and financial leverage ratio, have shown a consistent improvement in recent years. The debt-to-assets ratio has decreased from 0.24 in 2020 to 0.14 in 2023, indicating that the company's debt relative to its total assets has declined, which is a positive sign of improved solvency.
Similarly, the debt-to-capital ratio has shown a decreasing trend, declining from 0.41 in 2020 to 0.20 in 2023. This indicates that the proportion of debt in the company's capital structure has decreased over the years, making the company less reliant on debt to finance its operations.
The debt-to-equity ratio has also improved from 0.71 in 2020 to 0.25 in 2023, demonstrating that the company's debt is becoming a smaller portion of its equity. This reduction in financial leverage is a positive indicator of improved financial health and risk management.
Moreover, the financial leverage ratio has decreased consistently from 2.52 in 2020 to 1.82 in 2023, reflecting a decline in the company's dependence on debt to support its operations and investments.
Overall, the improving trend in these solvency ratios suggests that Murphy Oil Corp. has been effectively managing its debt levels and enhancing its financial stability over the analyzed period. This may increase investor confidence in the company's ability to meet its financial obligations and withstand economic challenges.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 8.63 | 9.45 | 0.64 | -7.52 | 6.31 |
Interest coverage is a ratio used to assess a company's ability to pay its interest expenses from its operating income. A higher interest coverage ratio indicates a company's stronger ability to meet its interest obligations.
Looking at Murphy Oil Corp.'s interest coverage over the past five years, the ratio has shown significant fluctuations. In 2023 and 2022, the company's interest coverage ratios were 9.59 and 11.22, respectively, indicating a healthy ability to cover its interest expenses with operating income in those years.
However, there were problematic years such as 2020 and 2019, where the interest coverage ratios were -0.61 and 2.15, respectively. A negative interest coverage ratio, as seen in 2020, indicates that the company's operating income was insufficient to cover its interest expenses. This could be a red flag for the company's financial health and ability to meet its debt obligations.
It is crucial for investors and stakeholders to monitor Murphy Oil Corp.'s interest coverage ratio closely to ensure that the company maintains a sustainable level of income to cover its interest expenses and avoid potential financial distress.