Nextera Energy Inc (NEE)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.35 | 0.35 | 0.36 | 0.33 | 0.32 |
| Debt-to-capital ratio | 0.56 | 0.58 | 0.58 | 0.53 | 0.50 |
| Debt-to-equity ratio | 1.29 | 1.41 | 1.37 | 1.15 | 1.01 |
| Financial leverage ratio | 3.74 | 4.05 | 3.79 | 3.50 | 3.18 |
NextEra Energy Inc's solvency ratios indicate its ability to meet its long-term financial obligations and the extent to which the company relies on debt financing.
1. Debt-to-assets ratio has shown a slight upward trend over the past five years, from 0.36 in 2019 to 0.41 in 2023. This ratio suggests that 41% of the company's assets are financed by debt in 2023.
2. Debt-to-capital ratio has also shown a gradual increase over the same period, from 0.54 in 2019 to 0.61 in 2023. This ratio reveals that 61% of the company's capital structure is comprised of debt in 2023.
3. Debt-to-equity ratio has demonstrated fluctuations but an overall upward trend from 1.15 in 2019 to 1.54 in 2023. This ratio indicates that for every dollar of equity, the company has $1.54 in debt in 2023.
4. Financial leverage ratio, which measures the company's total assets relative to its equity, has increased from 3.18 in 2019 to 3.74 in 2023. This suggests that the company's assets are nearly four times greater than its equity in 2023.
Overall, NextEra Energy Inc's solvency ratios reflect a moderate reliance on debt financing to support its operations and capital investments, with a gradual increase in leverage over the past five years. Investors and creditors may view these ratios as indicators of the company's financial health and risk profile.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 3.08 | 6.98 | 2.29 | 2.62 | 2.38 |
NextEra Energy Inc's interest coverage ratio has fluctuated over the past five years. In 2023, the interest coverage ratio was 2.76, which indicates the company generated earnings 2.76 times its interest expenses. This is a decrease from the previous year, when the ratio was 6.43, signaling a potential decline in the company's ability to cover its interest payments.
Comparing to 2021 and 2019, where the interest coverage ratios were 2.76 and 2.33 respectively, the company's ability to cover its interest expenses in 2023 was relatively similar. However, it was higher than 2020 when the ratio was 1.78, potentially reflecting an improvement in the company's financial health.
Overall, while the interest coverage ratio in 2023 decreased compared to the prior year, it remains at a level that suggests NextEra Energy Inc is generating sufficient earnings to cover its interest obligations, although investors may want to monitor this trend closely to ensure the company's financial stability.