NiSource Inc (NI)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.33 | 0.32 | 0.43 | 0.50 | 0.39 |
| Debt-to-capital ratio | 0.56 | 0.53 | 0.60 | 0.66 | 0.59 |
| Debt-to-equity ratio | 1.25 | 1.12 | 1.50 | 1.92 | 1.46 |
| Financial leverage ratio | 3.76 | 3.53 | 3.48 | 3.83 | 3.79 |
Solvency ratios provide insights into a company's ability to meet its long-term financial obligations. Looking at NiSource Inc's solvency ratios from 2019 to 2023, we observe the following trends:
1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. NiSource's debt-to-assets ratio has fluctuated between 0.41 and 0.45 during the period, suggesting that, on average, approximately 41% to 45% of the company's assets are funded by debt.
2. Debt-to-capital ratio: This ratio reveals the amount of the company's capital structure that is comprised of debt. NiSource's debt-to-capital ratio has ranged from 0.59 to 0.63 over the years, implying that around 59% to 63% of the company's capital comes from debt sources.
3. Debt-to-equity ratio: The debt-to-equity ratio provides insights into the extent to which debt is used to finance the company's operations compared to equity. NiSource's debt-to-equity ratio has varied between 1.41 and 1.71, indicating that the company has maintained a moderate to high level of debt relative to equity.
4. Financial leverage ratio: This ratio measures the company's total assets in relation to its equity. NiSource's financial leverage ratio has hovered between 3.48 and 3.83, highlighting the company's reliance on debt financing to support its asset base.
Overall, NiSource's solvency ratios depict a consistent usage of debt as a funding source for the company's operations, with some fluctuations observed over the years. Investors and stakeholders may monitor these ratios to assess NiSource's ability to manage its long-term debt obligations and maintain a healthy financial position.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.74 | 3.68 | 3.06 | 0.91 | 2.34 |
The interest coverage ratio is a key financial metric used to evaluate a company's ability to meet its interest payments on outstanding debt. A higher interest coverage ratio indicates that a company is more capable of making interest payments from its operating earnings.
Analyzing NiSource Inc's interest coverage ratios over the past five years, we observe fluctuations in the values. The interest coverage ratio decreased from 3.52 in 2019 to 2.63 in 2020, indicating a potentially reduced ability to cover interest expenses with operating earnings in 2020. However, there was a slight improvement in 2021 with an interest coverage ratio of 3.01. This was followed by a further increase to 3.25 in 2022 before dropping to 2.58 in 2023.
The downward trend in the interest coverage ratio in 2023 suggests a potential weakening in NiSource Inc's ability to cover its interest payments from its operating earnings. It is important for investors and creditors to closely monitor this ratio to assess the company's financial health and ability to service its debt obligations in the long term. Further analysis, considering the company's overall financial health and industry trends, would provide additional insights into the significance of these fluctuations in the interest coverage ratio.