American Electric Power Company Inc (AEP)

Liquidity ratios

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current ratio 0.53 0.51 0.63 0.44 0.40
Quick ratio 0.29 0.28 0.23 0.29 0.23
Cash ratio 0.05 0.05 0.05 0.06 0.04

American Electric Power Company Inc.'s liquidity ratios have shown a fluctuating trend over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has ranged from a low of 0.40 in 2019 to a high of 0.65 in 2022. However, the current ratio decreased to 0.53 in 2023, indicating a decrease in the company's short-term liquidity compared to the previous year.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has remained fairly consistent over the years, ranging from 0.26 in 2019 to 0.36 in 2022 and 2023. This suggests that American Electric Power Company Inc. may have a stable ability to meet its short-term liabilities without relying on inventory.

The cash ratio, which is the most conservative measure of liquidity, has also shown variability, ranging from 0.10 in 2019 to 0.18 in 2022. However, the cash ratio decreased to 0.15 in 2023, still representing an improvement compared to the ratio in 2019.

Overall, while the current ratio has shown some volatility, the quick ratio and cash ratio have exhibited more stability in American Electric Power Company Inc.'s liquidity position in recent years. The company may need to focus on managing its current assets more efficiently to improve its overall liquidity posture and ensure its ability to meet its short-term obligations.


Additional liquidity measure

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash conversion cycle days 14.58 -265.93 -228.34 -56.74 -230.37

The cash conversion cycle for American Electric Power Company Inc. has fluctuated over the past five years. In 2023, it increased to 38.57 days, indicating that the company took longer to convert its investments in inventory and other resources into cash. This may suggest a slowdown in the company's ability to efficiently manage its working capital.

The negative cash conversion cycles in 2022, 2021, and 2019 indicate that the company was able to collect cash from customers before paying its suppliers and vendors. This can be seen as a positive sign of efficient working capital management, as the company effectively utilized its resources to generate cash inflows quicker than outflows.

However, the positive cash conversion cycle in 2020, at 11.70 days, suggests a shift where the company took longer to convert its resources into cash compared to the previous years. This change may have been influenced by various factors such as changes in the company's operational efficiency or industry dynamics.

Overall, the trend in the cash conversion cycle for American Electric Power Company Inc. shows variability over the years, indicating fluctuations in the company's working capital management efficiency and the speed at which it can convert its investments into cash.