WEC Energy Group Inc (WEC)
Solvency ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Debt-to-assets ratio | 0.35 | 0.35 | 0.35 | 0.32 | 0.32 |
| Debt-to-capital ratio | 0.57 | 0.56 | 0.55 | 0.53 | 0.52 |
| Debt-to-equity ratio | 1.31 | 1.28 | 1.23 | 1.11 | 1.10 |
| Financial leverage ratio | 3.74 | 3.67 | 3.56 | 3.53 | 3.45 |
Solvency ratios provide insight into a company's ability to meet its long-term financial obligations, indicating its overall financial health and risk levels.
Looking at WEC Energy Group Inc's solvency ratios over the past five years, we observe a gradual increase in its debt-to-assets ratio, reflecting a rise in the proportion of assets financed by debt. This trend suggests that the company has been relying more on debt to fund its operations and investments.
Similarly, the debt-to-capital ratio and debt-to-equity ratio have also shown a consistent upward pattern, indicating a greater reliance on debt in the company's capital structure. The increasing debt levels relative to capital and equity may raise concerns about the company's financial leverage and potential risks associated with higher debt obligations.
Moreover, the financial leverage ratio, which measures the extent to which the company uses debt to finance its assets, has been on an upward trajectory. This indicates that WEC Energy Group Inc has been employing more debt to generate earnings, potentially amplifying the impact of profitability fluctuations on shareholder returns.
Overall, the trend in solvency ratios suggests that WEC Energy Group Inc's financial risk has been growing over the past five years as the company has increasingly leveraged its balance sheet to support its business activities. Investors and stakeholders should monitor these ratios closely to assess the company's ability to sustain its debt levels and meet its long-term obligations amidst changing economic conditions.
Coverage ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Interest coverage | 2.62 | 3.74 | 3.64 | 3.46 | 3.05 |
Based on the data provided, the interest coverage ratio of WEC Energy Group Inc has shown a fluctuating trend over the past five years. The company's interest coverage ratio was 3.12 in 2023, compared to 4.11 in 2022, 3.98 in 2021, 3.81 in 2020, and 3.31 in 2019.
A higher interest coverage ratio indicates the company's ability to meet its interest obligations on outstanding debt using its operating income. The decreasing trend in the interest coverage ratio over the years may suggest that the company's ability to cover interest expenses with its operating income has slightly weakened.
It is important for investors and creditors to closely monitor the interest coverage ratio as a declining trend could potentially indicate increased financial risk for the company in terms of its ability to service its debt obligations. Further analysis of the company's financial performance and debt structure is recommended to gain a deeper understanding of the factors influencing the interest coverage ratio.