SM Energy Co (SM)
Solvency ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-capital ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Debt-to-equity ratio | 0.00 | 0.00 | 0.00 | 0.00 | 0.00 |
| Financial leverage ratio | 2.02 | 1.76 | 1.85 | 2.54 | 2.47 |
Based on the provided solvency ratios for SM Energy Co, we can see that the company has consistently maintained a very low level of debt relative to its assets, capital, and equity.
- Debt-to-assets ratio: SM Energy Co's debt-to-assets ratio has been 0.00 for the years ending December 31, 2020 to December 31, 2024, indicating that the company has no debt relative to its total assets during this period.
- Debt-to-capital ratio: Similarly, the debt-to-capital ratio has also been 0.00 for the same years, suggesting that the company's debt is negligible compared to its total capital.
- Debt-to-equity ratio: The debt-to-equity ratio has also remained at 0.00 for the years provided, showing that there is no debt in relation to the equity of the company.
- Financial leverage ratio: The financial leverage ratio, which measures the company's total assets in relation to equity, has shown some variability over the years, ranging from 1.76 to 2.54. This indicates that while the company's reliance on debt financing has been limited, there have been fluctuations in the financial leverage level.
Overall, the low debt levels across all the solvency ratios suggest that SM Energy Co has a strong financial position and is not heavily leveraged. However, the fluctuation in the financial leverage ratio indicates some changes in the company's capital structure over the years, which may be worth further investigation.
Coverage ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Interest coverage | 7.87 | 10.98 | 13.12 | 1.30 | -4.86 |
Interest coverage ratio is a key measure of a company's ability to meet its interest obligations. It indicates how well a company can cover its interest payments with its earnings before interest and taxes (EBIT). A higher interest coverage ratio is generally more favorable, as it suggests the company is more capable of servicing its debt.
For SM Energy Co, the interest coverage ratio has shown significant fluctuations over the years. In 2020, the ratio was negative at -4.86, indicating that the company's EBIT was insufficient to cover its interest expenses. This signifies a financial risk and potential difficulty in meeting interest payments.
However, in the following years, there was a noticeable improvement in SM Energy Co's interest coverage ratio. By 2021, the ratio had increased to 1.30, signaling a slight recovery in the company's ability to cover its interest payments. Subsequently, in 2022, the interest coverage ratio improved significantly to 13.12, indicating a strong ability to meet interest obligations comfortably.
The trend continued in the subsequent years, with the interest coverage ratio remaining above 10.00 in 2023 and 2024. This demonstrates a continued improvement in the company's financial health and ability to manage its debt effectively.
Overall, the fluctuation in SM Energy Co's interest coverage ratio highlights the company's changing financial performance and debt management over the years. The recent increase in the ratio suggests a positive trajectory towards better financial stability and reduced risk related to interest payments.