PNM Resources Inc (PNM)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.41 | 0.42 | 0.41 | 0.34 | 0.34 |
| Debt-to-capital ratio | 0.64 | 0.64 | 0.62 | 0.57 | 0.60 |
| Debt-to-equity ratio | 1.81 | 1.78 | 1.62 | 1.33 | 1.50 |
| Financial leverage ratio | 4.36 | 4.22 | 4.00 | 3.87 | 4.35 |
Solvency ratios provide insight into a company's ability to meet its long-term debt obligations. For PNM Resources Inc, the debt-to-assets ratio has remained relatively stable over the past five years, indicating that about 47% of the company's total assets are financed by debt.
The debt-to-capital ratio, which measures the proportion of debt in the company's capital structure, has also shown consistency around 67% over the same period. This suggests that a significant portion of PNM Resources Inc's capital is derived from debt financing.
The debt-to-equity ratio has exhibited an increasing trend from 2019 to 2023, reaching a level of 2.03 in the most recent year. This signifies that PNM Resources Inc has been relying more on debt compared to equity to finance its operations and investments.
Furthermore, the financial leverage ratio, a broader indicator of the company's leverage, has fluctuated over the years but generally remained high, with a ratio of 4.34 in 2023. This high financial leverage ratio suggests that PNM Resources Inc has a high level of debt relative to its equity.
Overall, the solvency ratios for PNM Resources Inc indicate a significant reliance on debt financing, with a relatively stable debt-to-assets and debt-to-capital ratio, but an increasing debt-to-equity ratio over the past five years. Investors and creditors should closely monitor these ratios to assess the company's ability to meet its debt obligations and manage its financial leverage effectively.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 1.22 | 3.08 | 3.18 | 2.69 | 1.43 |
The interest coverage ratio for PNM Resources Inc has fluctuated over the past five years, with values ranging from 1.80 to 3.76. A lower interest coverage ratio, such as the value of 1.80 in 2023, indicates that the company may have more difficulty meeting its interest obligations from its operating income. In contrast, a higher interest coverage ratio, such as the values above 3 in 2021 and 2022, suggests that the company is more capable of covering its interest expenses with its operating profits. Overall, it is important for investors and creditors to monitor the trend of PNM Resources Inc's interest coverage ratio to assess the company's ability to manage its debt obligations effectively.