Pinnacle West Capital Corp (PNW)

Solvency ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Debt-to-assets ratio	0.31	0.33	0.34	0.34	0.34	0.32	0.32	0.33	0.31	0.31	0.30	0.32	0.32	0.32	0.31	0.26	0.26	0.27	0.27	0.27
Debt-to-capital ratio	0.55	0.56	0.58	0.57	0.56	0.54	0.55	0.55	0.54	0.53	0.52	0.53	0.53	0.52	0.52	0.47	0.47	0.47	0.48	0.48
Debt-to-equity ratio	1.22	1.28	1.37	1.31	1.28	1.18	1.23	1.22	1.17	1.12	1.10	1.14	1.12	1.08	1.08	0.88	0.89	0.90	0.93	0.93
Financial leverage ratio	3.99	3.83	4.02	3.90	3.76	3.66	3.81	3.74	3.73	3.55	3.68	3.55	3.55	3.38	3.52	3.39	3.40	3.31	3.47	3.40

Pinnacle West Capital Corp.'s solvency ratios provide insights into the company's ability to meet its long-term financial obligations and assess its leverage levels.

1. Debt-to-assets ratio: This ratio indicates the proportion of the company's assets financed by debt. Pinnacle West's debt-to-assets ratio has been relatively stable, hovering around 0.36 to 0.37 in the last few quarters, indicating that around 36-37% of its assets are funded by debt.

2. Debt-to-capital ratio: The debt-to-capital ratio reflects the percentage of the company's capital structure that is financed by debt. Pinnacle West's debt-to-capital ratio has also remained fairly consistent, fluctuating between 0.56 to 0.60 over the quarters, suggesting that debt accounts for approximately 56-60% of its total capital.

3. Debt-to-equity ratio: This ratio compares the company's total debt to its shareholders' equity, demonstrating the extent of leverage. Pinnacle West's debt-to-equity ratio has shown a gradual increase from 1.26 in Q1 2022 to 1.47 in Q2 2023, possibly indicating a higher reliance on debt financing compared to shareholder equity.

4. Financial leverage ratio: The financial leverage ratio measures the company's ability to meet its fixed financing costs and assesses its financial risk. Pinnacle West's financial leverage ratio has varied but generally increased over the quarters, with values ranging from 3.66 to 4.02, reflecting an upward trend in the company's financial leverage.

Overall, the solvency ratios of Pinnacle West Capital Corp. suggest a stable debt-to-assets and debt-to-capital structure, with a slight increase in leverage indicated by the debt-to-equity and financial leverage ratios. It is essential for investors and stakeholders to monitor these ratios to evaluate the company's financial health and risk profile.

Coverage ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Interest coverage	2.49	2.51	2.38	2.70	2.86	3.02	3.13	3.42	3.45	3.38	3.52	3.45	3.44	3.41	3.22	2.99	3.10	3.35	3.46	3.65

Pinnacle West Capital Corp.'s interest coverage ratio has shown a gradual decline over the past four quarters, from 3.52 in Q1 2022 to 2.71 in Q4 2023. This might indicate a potential tightening of the company's ability to cover its interest expenses with its operating profits. Despite the decreasing trend, the interest coverage ratio has generally remained above 2.5, suggesting that the company is still generating sufficient earnings to meet its interest obligations comfortably. However, management should closely monitor this metric to ensure that the trend does not continue downwards, as sustained reductions in interest coverage could raise concerns about the company's financial health and ability to service debt in the long run.