UNITIL Corporation (UTL)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.30 | 0.31 | 0.32 | 0.35 | 0.32 |
| Debt-to-capital ratio | 0.51 | 0.51 | 0.53 | 0.57 | 0.54 |
| Debt-to-equity ratio | 1.04 | 1.05 | 1.11 | 1.34 | 1.16 |
| Financial leverage ratio | 3.41 | 3.40 | 3.43 | 3.80 | 3.64 |
Unitil Corp.'s solvency ratios indicate the company's ability to meet its long-term financial obligations and the extent of reliance on debt financing. The debt-to-assets ratio has remained fairly consistent over the past five years, ranging from 0.37 to 0.40, indicating that on average, 37-40% of the company's assets are financed by debt.
The debt-to-capital ratio has also remained relatively stable, fluctuating between 0.56 and 0.60. This ratio shows that around 56-60% of Unitil's capital structure is funded by debt.
The debt-to-equity ratio has shown some variation, with a peak of 1.51 in 2020 and a low of 1.27 in 2021. The ratio was at 1.38 at the end of 2023, indicating that the company relies moderately on debt to finance its operations compared to equity.
The financial leverage ratio, which measures the company's total assets in relation to equity, has shown some volatility. It decreased from 3.80 in 2020 to 3.41 in 2023. This implies that the company's assets are financed at a ratio of approximately 3.41 times its equity.
Overall, Unitil Corp. appears to maintain a prudent level of debt in its capital structure, which can enhance its financial stability and possibly lower its cost of capital. However, monitoring these ratios over time is essential to assess the company's evolving financial health and risk management strategies.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.67 | 2.86 | 2.75 | 2.61 | 3.18 |
The interest coverage ratio measures a company's ability to meet its interest obligations on outstanding debt. Unitil Corp.'s interest coverage ratio has remained relatively consistent over the past five years, ranging from 3.00 to 3.16. This indicates that the company's earnings before interest and taxes (EBIT) have been sufficiently higher than its interest expenses each year.
A ratio above 1.0 typically indicates that a company generates enough income to cover its interest payments, with higher ratios suggesting a greater margin of safety. Unitil Corp.'s interest coverage ratios all consistently above 3.0 indicate a strong capacity to meet its interest obligations, reflecting a stable and healthy financial position.
Overall, Unitil Corp.'s consistent interest coverage ratios over the last five years demonstrate that the company has been effectively managing its debt burden and is likely viewed favorably by lenders and investors for its ability to service its debt obligations.