American Electric Power Co Inc (AEP)

Cash ratio

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash and cash equivalents US$ in thousands 202,900 330,100 509,400 403,400 392,700
Short-term investments US$ in thousands 215,400 214,300 187,600 220,400 200,800
Total current liabilities US$ in thousands 13,009,300 11,583,600 13,266,300 12,426,700 9,926,700
Cash ratio 0.03 0.05 0.05 0.05 0.06

December 31, 2024 calculation

Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($202,900K + $215,400K) ÷ $13,009,300K
= 0.03

The cash ratio of American Electric Power Co Inc has shown a declining trend over the years based on the provided data. As of December 31, 2020, the cash ratio was 0.06, indicating that the company had $0.06 in cash and cash equivalents for every $1 of current liabilities. However, by December 31, 2024, the cash ratio had decreased to 0.03, highlighting a decrease in the company's ability to cover its short-term obligations with its cash on hand.

A decreasing cash ratio may suggest that the company may be facing challenges in maintaining sufficient liquid assets to meet its current liabilities. This could raise concerns about the company's liquidity position and its ability to handle unforeseen financial obligations in the short term.

It is important for stakeholders and investors to monitor the cash ratio of American Electric Power Co Inc and assess the reasons behind the decline to gauge the company's financial health and risk exposure. Additional analysis of the company's cash management practices and overall liquidity position would provide a more comprehensive understanding of its financial standing.