American Electric Power Company Inc (AEP)

Current ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Total current assets	US$ in thousands	6,082,100	6,775,500	7,809,200	4,351,500	4,077,800
Total current liabilities	US$ in thousands	11,583,600	13,266,300	12,426,700	9,926,700	10,299,100
Current ratio		0.53	0.51	0.63	0.44	0.40

December 31, 2023 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $6,082,100K ÷ $11,583,600K
= 0.53

The current ratio of American Electric Power Company Inc. has fluctuated over the past five years, ranging from 0.40 in 2019 to 0.65 in 2022. The company's current ratio indicates its ability to cover short-term obligations with its current assets. Generally, a higher current ratio is considered more favorable as it suggests the company is more capable of meeting its short-term financial commitments.

However, in 2023, the current ratio decreased to 0.53, which may raise concerns about the company's liquidity position. A current ratio below 1.0 may suggest that the company has insufficient current assets to cover its current liabilities, potentially indicating liquidity challenges.

It is essential for investors and analysts to further investigate the reasons behind the decrease in the current ratio in 2023 to assess the company's liquidity risk and financial health accurately. Additional factors such as changes in current assets and liabilities, operational efficiency, and overall financial management should be considered in conjunction with the current ratio analysis to gain a comprehensive understanding of American Electric Power Company Inc.'s liquidity position.