Ameren Corp (AEE)

Ameren Corp.'s liquidity ratios, including the current ratio, quick ratio, and cash ratio, have shown fluctuations over the past five years. The current ratio, which measures short-term liquidity by comparing current assets to current liabilities, has decreased from 0.57 in 2019 to 0.65 in 2023. This indicates that Ameren's ability to cover its short-term obligations with its current assets has weakened over time.

The quick ratio, a more conservative measure of liquidity that excludes inventory from current assets, has also declined from 0.37 in 2019 to 0.43 in 2023. This suggests that Ameren's ability to meet its immediate liabilities without relying on selling inventory has diminished.

Furthermore, the cash ratio, which assesses the company's ability to cover its current liabilities solely with cash and cash equivalents, has fluctuated, reaching the lowest point in 2019 at 0.08 and improving to 0.16 in 2023. Although the upward trend in the cash ratio is positive, it still signals some vulnerability in Ameren's ability to settle short-term debts with available cash on hand.

Overall, Ameren Corp.'s liquidity ratios indicate a mixed performance in managing short-term financial obligations over the years, with a general trend towards decreasing liquidity levels. Investors and creditors may want to closely monitor these ratios to assess Ameren's ability to meet its short-term financial commitments effectively.

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Additional liquidity measure

The cash conversion cycle of Ameren Corp. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 168.19 days from 141.40 days in 2022, indicating a slight deterioration in the efficiency of converting its investments in raw materials and other inputs into cash receipts from sales. This increase in the cash conversion cycle could be a result of longer inventory holding periods, longer accounts receivable collection times, or shorter accounts payable payment periods.

Comparing the 2023 figure to previous years, the company's cash conversion cycle has improved since 2021 when it was 179.46 days. This suggests that Ameren Corp. has been more efficient in managing its working capital and converting its assets into cash since 2021. However, there was a notable increase in the cash conversion cycle compared to 2020 and 2019, when it stood at 236.78 days and 210.60 days, respectively. This implies that the company's efficiency in managing its working capital was better in those years compared to 2023.

Overall, Ameren Corp. needs to focus on optimizing its inventory management, accounts receivable collection, and accounts payable payment processes to further enhance its cash conversion cycle efficiency and maximize its cash flow generation.