Ameren Corp (AEE)

Ameren Corp's liquidity ratios, based on the provided data, indicate varying levels of the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- Ameren Corp's current ratio has fluctuated over the years, ranging from 0.65 to 0.84.
- A current ratio below 1 suggests that the company may have difficulty meeting its short-term obligations with its current assets alone.
- The current ratio of Ameren Corp shows some instability but has improved in 2024 compared to 2023.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets.
- Ameren Corp's quick ratio has been consistently low, ranging from 0.01 to 0.10.
- A quick ratio below 1 indicates that the company may have difficulty meeting its short-term obligations without relying on the sale of inventory.
- Ameren Corp's quick ratio shows a slight improvement in 2023 and 2024 compared to 2020 and 2021.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents.
- Ameren Corp's cash ratio has remained low, ranging from 0.01 to 0.10, which suggests the company may have limited cash reserves relative to its current liabilities.
- A cash ratio below 0.2 is generally considered weak, indicating a potential liquidity risk for the company.
- Ameren Corp's cash ratio has not shown significant improvement over the years, indicating a need to closely monitor its cash position.

In summary, Ameren Corp's liquidity ratios indicate a need for the company to closely manage its short-term liquidity position, especially considering the consistent low levels of the quick and cash ratios. Management should focus on improving these ratios to ensure the company can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Ameren Corp has shown fluctuations over the years based on the provided data. As of December 31, 2020, the cash conversion cycle was at 64.77 days, indicating the average number of days it takes for the company to convert its investments in inventory and other resources back into cash. By December 31, 2021, the cycle decreased slightly to 63.50 days before experiencing a significant drop to 52.76 days by December 31, 2022.

However, the cycle then increased to 66.34 days by December 31, 2023, reflecting a potential increase in the time required to convert investments back into cash. The most notable change occurred by December 31, 2024, where the cash conversion cycle dramatically reduced to 22.43 days, signaling a considerably faster conversion of investments into cash.

Overall, Ameren Corp has demonstrated variations in its cash conversion cycle over the years, with some periods indicating improved efficiency in managing its working capital and cash flows, while others suggest potential challenges in the conversion process. Monitoring this metric is crucial for assessing the company's liquidity management and operational effectiveness.