NiSource Inc (NI)

NiSource Inc's solvency ratios provide insight into the company's ability to meet its long-term financial obligations. Looking at the trend of the ratios over the years, we can see some key observations:

1. Debt-to-assets ratio has decreased from 0.50 in 2020 to 0.39 in 2024. This indicates that the proportion of the company's assets financed by debt has slightly increased but has generally been well managed over the period.

2. Debt-to-capital ratio has also shown a decreasing trend, declining from 0.66 in 2020 to 0.59 in 2024. This suggests that the company has been using less debt to finance its operations relative to its total capital structure.

3. Debt-to-equity ratio has followed a similar pattern, decreasing from 1.92 in 2020 to 1.44 in 2024. This means that the company has been reducing its reliance on debt financing in relation to its equity, which can be seen as a positive sign of financial stability.

4. Financial leverage ratio, which measures the company's total assets in relation to its equity, has fluctuated but remained relatively stable over the years, ranging from 3.48 to 3.83. This ratio indicates the level of financial risk the company is taking on, and the stability suggests a consistent balance between debt and equity funding.

Overall, NiSource Inc's solvency ratios show a prudent management of debt levels and a gradual improvement in financial leverage. These trends indicate a healthy financial position and an ability to meet its long-term obligations effectively.

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Coverage ratios

Based on the provided data for NiSource Inc's interest coverage ratio, we observe the following trends:

1. In December 31, 2020, the interest coverage ratio was 0.91, indicating that the company earned just enough operating income to cover its interest expenses. This could be a concern as having a ratio below 1 suggests that the company is not generating sufficient earnings to meet its interest obligations.

2. Over the next years, we see a significant improvement in the interest coverage ratio. By December 31, 2024, the interest coverage ratio had increased substantially to 19.38. This indicates that the company's earnings had grown substantially, providing a comfortable buffer to cover its interest payments.

3. The trend of increasing interest coverage ratios from 2020 to 2024 suggests that NiSource Inc has become more efficient in generating earnings relative to its interest expenses. The company's ability to cover interest payments has strengthened significantly, reducing the risk of potential financial distress due to high leverage.

4. It is advisable for investors and creditors to monitor NiSource Inc's interest coverage ratio in the future to ensure that the company maintains a healthy level of earnings relative to its interest obligations. A consistently improving trend in this ratio indicates the company's ability to meet its debt obligations and generate sufficient profits to support its operations and growth.