OGE Energy Corporation (OGE)

Solvency ratios provide insight into a company's ability to meet its long-term financial obligations. Let's analyze Oge Energy Corp.'s solvency ratios over the past five years:

1. Debt-to-assets ratio:
- The debt-to-assets ratio measures the proportion of a company's assets financed by debt. Oge Energy Corp.'s ratio has been relatively stable around 0.30 to 0.40 over the past five years.
- An increasing ratio may indicate a higher level of financial risk, while a decreasing ratio suggests improved financial stability.
- Oge Energy Corp.'s debt-to-assets ratio indicates that, on average, 38% to 40% of its assets are financed through debt.

2. Debt-to-capital ratio:
- The debt-to-capital ratio evaluates the extent to which a company relies on debt to finance its operations. Oge Energy Corp.'s ratio has fluctuated between 0.44 to 0.55 during the period under review.
- This ratio shows the portion of the company's capital structure that comes from debt financing, with higher ratios indicating higher financial leverage.
- Oge Energy Corp.'s debt-to-capital ratio suggests that, on average, 50% to 55% of its capital structure is comprised of debt.

3. Debt-to-equity ratio:
- The debt-to-equity ratio compares a company's total debt to its shareholders' equity. Oge Energy Corp.'s ratio ranges from 0.80 to 1.23 over the past five years.
- A higher debt-to-equity ratio indicates greater financial risk and reliance on debt financing, while a lower ratio is typically viewed more favorably by investors.
- Oge Energy Corp.'s debt-to-equity ratio implies that, on average, its debt levels have been 80% to 123% of its equity during the period analyzed.

4. Financial leverage ratio:
- The financial leverage ratio provides a broader view of a company's financial risk by comparing its total assets to equity. Oge Energy Corp.'s ratio has varied from 2.66 to 3.11 in the past five years.
- A higher financial leverage ratio suggests higher risk due to increased financial leverage and reliance on debt financing.
- Oge Energy Corp.'s financial leverage ratio indicates that, on average, its assets have been 2.66 to 3.11 times greater than its equity.

Overall, Oge Energy Corp. has maintained relatively stable solvency ratios over the years, indicating a balanced approach to financing its operations through a mix of debt and equity.

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Coverage ratios

Interest coverage is a financial ratio that indicates a company's ability to cover its interest expenses with its operating income. Oge Energy Corp.'s interest coverage has shown some fluctuations over the past five years. In 2023, the interest coverage ratio was 2.94, which indicates that the company's operating income was sufficient to cover its interest expenses, although at a slightly lower level compared to the previous year. The 2022 interest coverage of 3.91 was higher, suggesting improved ability to cover interest expenses.

In 2021, the interest coverage ratio was 4.51, indicating a strong ability to cover interest expenses with operating income. However, in 2020, the interest coverage ratio was negative at -0.92, signaling that the company's operating income was not sufficient to cover its interest expenses during that period. This could be a red flag as it indicates financial distress and the need for immediate attention.

Lastly, in 2019, the interest coverage ratio was 4.18, showing a strong ability to cover interest expenses with operating income. Overall, it is essential for Oge Energy Corp. to closely monitor its interest coverage ratio to ensure financial stability and make necessary adjustments to maintain a healthy financial position.