Xcel Energy Inc (XEL)

Solvency ratios measure a company's ability to meet its long-term financial obligations. In the case of Xcel Energy, Inc., we will analyze four key solvency ratios over the past five years.

1. Debt-to-assets ratio:
The debt-to-assets ratio indicates the proportion of the company's assets financed by debt. Xcel Energy's debt-to-assets ratio has shown a slightly increasing trend over the past five years, from 0.37 in 2019 to 0.41 in 2023. This suggests that a higher percentage of the company's assets are being funded by debt.

2. Debt-to-capital ratio:
The debt-to-capital ratio measures the proportion of the company's capital structure that is financed by debt. Xcel Energy's debt-to-capital ratio has remained relatively stable around 0.60 over the past five years, indicating a consistent balance between debt and equity in the company's capital structure.

3. Debt-to-equity ratio:
The debt-to-equity ratio compares the amount of debt to the amount of equity in the company's capital structure. Xcel Energy's debt-to-equity ratio has exhibited a slight increasing trend over the past five years, from 1.41 in 2019 to 1.49 in 2023. This indicates that the company has been relying more on debt financing relative to equity.

4. Financial leverage ratio:
The financial leverage ratio measures the extent to which a company uses debt to finance its assets. Xcel Energy's financial leverage ratio has fluctuated over the past five years but remained within a narrow range, ranging from 3.64 in 2023 to 3.81 in 2019. This ratio suggests that the company has been maintaining a stable level of leverage in its operations.

Overall, the solvency ratios indicate that Xcel Energy has been managing its long-term financial obligations reasonably well, with a balanced mix of debt and equity in its capital structure. The increasing trend in some ratios may warrant further monitoring to ensure the company's financial health and sustainability in the long run.

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Coverage ratios

Xcel Energy, Inc.'s interest coverage ratio has shown a slight decrease over the past five years, declining from 2.77 in 2019 to 2.49 in 2023. This ratio indicates the company's ability to meet its interest payments on outstanding debt obligations. Despite the slight decrease, Xcel Energy's interest coverage ratio remains relatively stable and at a healthy level above 1, suggesting that the company is generating sufficient operating income to cover its interest expenses. Investors and creditors typically view a higher interest coverage ratio favorably, as it indicates a lower risk of potential default on debt obligations. Overall, Xcel Energy's consistent interest coverage ratios over the years reflect a sound financial position in terms of managing its debt.