Otter Tail Corporation (OTTR)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.25 | 0.28 | 0.27 | 0.24 | 0.30 |
| Debt-to-capital ratio | 0.36 | 0.40 | 0.43 | 0.42 | 0.47 |
| Debt-to-equity ratio | 0.57 | 0.68 | 0.74 | 0.72 | 0.88 |
| Financial leverage ratio | 2.25 | 2.38 | 2.78 | 2.96 | 2.91 |
The solvency ratios of Otter Tail Corporation suggest a favorable trend in the company's ability to meet its long-term financial obligations over the past five years.
The debt-to-assets ratio has decreased from 0.31 in 2021 to 0.28 in 2023, indicating that the company has reduced its reliance on debt to finance its assets. This implies a stronger financial position and lower risk for creditors.
Similarly, the debt-to-capital ratio has shown a downward trend from 0.46 in 2021 to 0.39 in 2023. This reduction indicates that the company has decreased its debt financing relative to its total capital, which can improve financial stability and reduce financial risk.
The debt-to-equity ratio has also improved over the years, dropping from 0.97 in 2020 to 0.63 in 2023. This decline signifies that the company has reduced its reliance on debt in relation to shareholder equity, indicating a healthier capital structure and less financial leverage.
Furthermore, the financial leverage ratio has decreased from 2.91 in 2019 to 2.25 in 2023, showcasing a decreasing trend in the company's reliance on debt funding compared to equity. This lower financial leverage ratio signifies a reduced financial risk and a stronger solvency position for Otter Tail Corporation.
Overall, the declining trend in these solvency ratios reflects positively on Otter Tail Corporation's financial health and indicates an improving ability to meet its long-term debt obligations, which can enhance investor confidence and creditworthiness.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 10.65 | 10.93 | 6.63 | 4.37 | 4.29 |
The interest coverage ratio of Otter Tail Corporation has shown a general increasing trend over the past five years. The ratio was 4.29 in both 2020 and 2019, indicating that the company's operating income was just sufficient to cover its interest expenses.
However, in 2021, the interest coverage ratio improved significantly to 6.61, suggesting that the company's operating income could cover its interest expenses more comfortably. This improvement continued in 2022, with the ratio rising to 10.84, indicating a stronger ability to meet interest obligations.
In the most recent year, 2023, the interest coverage ratio further increased to 10.03, remaining at a healthy level. This indicates that Otter Tail Corporation has been generating ample operating income to comfortably cover its interest expenses, which is a positive sign of financial health and stability. Overall, the trend of increasing interest coverage ratios reflects improving financial performance and efficiency in managing interest obligations.