Patterson-UTI Energy Inc (PTEN)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.17 | 0.26 | 0.29 | 0.27 | 0.22 |
| Debt-to-capital ratio | 0.20 | 0.33 | 0.35 | 0.31 | 0.25 |
| Debt-to-equity ratio | 0.25 | 0.50 | 0.53 | 0.45 | 0.34 |
| Financial leverage ratio | 1.54 | 1.89 | 1.84 | 1.64 | 1.57 |
The solvency ratios of Patterson-UTI Energy Inc provide insights into the company's ability to meet its long-term financial obligations and the extent to which it relies on debt financing.
The debt-to-assets ratio, which measures the proportion of assets financed by debt, has decreased from 0.29 in 2021 to 0.17 in 2023, indicating that the company's level of indebtedness in relation to its total assets has improved. This suggests a stronger financial position and lower risk associated with debt obligations.
The debt-to-capital ratio, which assesses the company's overall debt burden relative to its total capital, has also shown a decreasing trend from 0.35 in 2021 to 0.21 in 2023. This indicates a lower reliance on debt capital and a higher proportion of equity financing in the capital structure, which may reduce financial risk.
The debt-to-equity ratio, reflecting the relationship between debt and shareholders' equity, has decreased steadily from 0.53 in 2021 to 0.27 in 2023. A declining trend in this ratio signifies that the company is relying less on debt financing and becoming more equity-funded, which can enhance financial stability.
The financial leverage ratio, measuring the extent to which a company uses debt to finance its operations, has also shown a decreasing pattern from 1.84 in 2021 to 1.54 in 2023. A lower financial leverage ratio suggests a lower financial risk associated with debt repayment obligations.
Overall, the solvency ratios of Patterson-UTI Energy Inc demonstrate a positive trend towards a stronger financial position, lower reliance on debt financing, and improved ability to meet long-term obligations, indicating enhanced solvency and financial stability over the analyzed period.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 6.82 | 5.17 | -16.09 | -21.84 | -6.05 |
The interest coverage ratio for Patterson-UTI Energy Inc has shown significant improvement over the years, reflecting the company's ability to cover its interest expenses with operating profits. In 2023, the interest coverage ratio stands at 9.28, indicating a strong ability to meet interest obligations. This is a significant improvement compared to the ratios in the previous years, which were 5.03 in 2022, -15.92 in 2021, -11.43 in 2020, and -6.45 in 2019.
The negative ratios in 2021, 2020, and 2019 are concerning as they suggest that the company's operating profits were insufficient to cover its interest expenses during those years. However, the substantial improvement in 2023 signifies that Patterson-UTI Energy Inc's financial health has strengthened, and it now has a more robust ability to service its debt obligations.
Overall, the increasing trend in the interest coverage ratio indicates a positive development in the company's financial performance and debt management capabilities. Investors and stakeholders can find assurance in the company's improved ability to cover its interest expenses, reflecting a stronger financial position.