Southern Company (SO)

The solvency ratios of Southern Company indicate a strong financial position with consistently low levels of debt relative to its assets, capital, and equity over the years.

The Debt-to-assets ratio remained at 0.00 throughout the five-year period, suggesting that the company's total debt is negligible compared to its total assets. This indicates a low risk of insolvency based on the company's asset base.

Similarly, the Debt-to-capital ratio and Debt-to-equity ratio also stayed at 0.00 across all years, highlighting the company's ability to finance its operations predominantly through its capital and equity rather than relying heavily on debt. This signifies a conservative capital structure that is favorable for long-term financial stability.

The Financial leverage ratio, which measures the extent of a company's financial leverage, was relatively stable around 4.4 to 4.5 throughout the period. This suggests that the company has a moderate level of financial leverage, which is manageable and indicates an efficient use of debt to support its operations and investments.

Overall, Southern Company's solvency ratios demonstrate a sound financial position with a conservative debt structure and a sustainable level of leverage, underpinning its ability to meet its financial obligations and support future growth initiatives.

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Coverage ratios

The interest coverage ratio measures a company's ability to meet its interest payments on outstanding debt obligations. In the case of Southern Company, the interest coverage ratio has shown some fluctuations over the past five years.

As of December 31, 2020, the interest coverage ratio was 2.91, indicating that Southern Company generated 2.91 times more earnings before interest and taxes (EBIT) than the amount needed to cover its interest expense for that year.

However, by December 31, 2021, the interest coverage ratio decreased to 2.36, which suggests a slight weakening of the company's ability to cover its interest payments with its operating earnings.

Subsequently, by December 31, 2022, the interest coverage ratio improved to 2.92, showing a positive trend in the company's ability to meet its interest obligations.

In the following years, the interest coverage ratio remained relatively stable, coming in at 2.77 as of December 31, 2023, and 2.91 as of December 31, 2024. These values indicate that Southern Company maintained a moderate level of ability to handle its interest expenses compared to its earnings during those periods.

Overall, the fluctuations in the interest coverage ratio for Southern Company reflect varying levels of financial risk and operational performance over the analyzed years. It is important for investors and stakeholders to monitor this ratio to assess the company's ability to manage its debt obligations effectively.