Ovintiv Inc (OVV)

The solvency ratios of Ovintiv Inc over the past five years indicate the company's ability to meet its long-term financial obligations.

The Debt-to-assets ratio has shown a fluctuating trend, with a decrease from 0.49 in 2020 to 0.29 in 2023. This indicates that the company's reliance on debt to finance its assets has eased over the years.

Similarly, the Debt-to-capital ratio has also exhibited a decreasing trend, from 0.65 in 2020 to 0.36 in 2023, suggesting a reduction in the proportion of debt used to finance the company's capital structure.

The Debt-to-equity ratio portrays a declining trend as well, dropping from 1.85 in 2020 to 0.56 in 2023. This indicates that Ovintiv's reliance on debt relative to equity has diminished significantly in recent years.

Lastly, the Financial leverage ratio has decreased from 3.77 in 2020 to 1.93 in 2023, signaling a reduction in the company's overall financial leverage and dependence on debt financing.

Overall, the trends in these solvency ratios suggest that Ovintiv Inc has been improving its financial health and reducing its reliance on debt as a source of long-term financing, which may enhance the company's ability to weather economic downturns and meet its financial obligations effectively.

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Coverage ratios

The interest coverage ratio measures a company's ability to pay its interest expenses on outstanding debt. A higher ratio indicates a stronger ability to meet interest obligations. Looking at Ovintiv Inc's interest coverage over the past five years, we observe a notable fluctuation in this ratio.

In 2023, Ovintiv Inc's interest coverage ratio stood at 7.87, reflecting a slight decline from the previous year but still showing a healthy ability to cover interest payments. This indicates that the company's earnings before interest and taxes (EBIT) were nearly 8 times greater than its interest expenses in 2023.

In 2022, Ovintiv Inc demonstrated a robust interest coverage ratio of 12.17, indicating a significant improvement from the previous year. This suggests a strong ability to cover interest costs, with EBIT exceeding interest expenses by over 12 times.

In 2021, the interest coverage ratio decreased to 4.25, which, although lower than the previous year, still indicates a reasonable ability to meet interest obligations. The 2020 ratio of 0.30 reflects a concerning trend where the company's EBIT was barely sufficient to cover interest payments. This could signify financial stress and increased risk of default.

Furthermore, the interest coverage ratio in 2019 was 1.37, showing a slight improvement from the previous year but still indicating a relatively tight coverage of interest expenses.

Overall, Ovintiv Inc's interest coverage has varied significantly over the past five years, with fluctuations that may raise concerns about the company's ability to maintain consistent interest payment coverage. Investors and stakeholders should monitor this ratio closely as it provides insights into the company's financial health and risk level related to its debt obligations.