PPL Corporation (PPL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.37 | 0.34 | 0.32 | 0.28 | 0.45 |
| Debt-to-capital ratio | 0.51 | 0.48 | 0.44 | 0.50 | 0.61 |
| Debt-to-equity ratio | 1.05 | 0.93 | 0.78 | 1.02 | 1.60 |
| Financial leverage ratio | 2.82 | 2.72 | 2.42 | 3.60 | 3.52 |
PPL Corp's solvency ratios indicate the company's ability to meet its long-term financial obligations and the extent to which it relies on debt to finance its operations.
The debt-to-assets ratio has been relatively stable over the five-year period, ranging from 0.34 in 2021 to 0.52 in 2020. This ratio shows that, on average, 40% of the company's assets are financed by debt.
The debt-to-capital ratio has followed a similar trend, with a slight increase from 0.45 in 2021 to 0.53 in 2023. This ratio indicates that, on average, 53% of the company's capital structure is comprised of debt.
The debt-to-equity ratio has shown more variability, decreasing from 1.85 in 2020 to 1.12 in 2023. This ratio suggests that, on average, the company has $1.12 of debt for every dollar of equity.
The financial leverage ratio reflects a company's total debt relative to its equity, with PPL Corp's ratio ranging from 2.42 in 2021 to 3.60 in 2020. This ratio indicates that the company has, on average, maintained a high level of financial leverage over the period.
Overall, PPL Corp's solvency ratios show a mix of stability and variability, with the company relying significantly on debt to finance its operations and investments. It will be important for the company to carefully manage its debt levels to maintain a healthy balance between debt and equity in the future.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.39 | 2.87 | -0.06 | 3.81 | 4.11 |
The interest coverage ratio measures a company's ability to cover its interest expenses with its operating income. A higher ratio indicates that the company is more capable of servicing its debt obligations.
Analyzing the interest coverage ratio of PPL Corp over the past five years, we observe fluctuations in the company's ability to cover its interest payments:
- In 2023, the interest coverage ratio was 2.57, indicating a slight decrease from the previous year. This may signal a slightly reduced ability to cover interest expenses with operating income.
- In 2022, the interest coverage ratio was 2.70, showing a relatively stable performance compared to the previous year.
- In 2021, the interest coverage ratio dropped to 1.57, signaling a significant decline in PPL Corp's ability to cover its interest expenses. This might raise concerns about the company's debt repayment capacity.
- In 2020, the interest coverage ratio improved to 2.83, reflecting a better ability to cover interest expenses compared to the previous year.
- In 2019, the interest coverage ratio was 2.90, showing a relatively stable performance from the previous year.
Overall, the trend in PPL Corp's interest coverage ratio indicates some volatility, with fluctuations in the company's ability to cover interest expenses. It would be important for investors and stakeholders to monitor this ratio closely as it reflects the company's financial health and its capacity to manage debt obligations.