American Electric Power Co Inc (AEP)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.44 | 0.57 | 0.54 | 0.53 | 0.60 | 0.61 | 0.62 | 0.51 | 0.79 | 0.75 | 0.61 | 0.63 | 0.58 | 0.44 | 0.42 | 0.44 | 0.48 | 0.42 | 0.45 | 0.40 |
| Quick ratio | 0.27 | 0.33 | 0.29 | 0.29 | 0.32 | 0.25 | 0.26 | 0.28 | 0.30 | 0.28 | 0.23 | 0.23 | 0.42 | 0.29 | 0.27 | 0.29 | 0.30 | 0.25 | 0.32 | 0.23 |
| Cash ratio | 0.03 | 0.04 | 0.04 | 0.05 | 0.05 | 0.04 | 0.04 | 0.05 | 0.06 | 0.06 | 0.07 | 0.05 | 0.16 | 0.05 | 0.05 | 0.06 | 0.07 | 0.05 | 0.15 | 0.04 |
American Electric Power Co Inc's liquidity ratios show varying levels over the years. The current ratio has improved from a low of 0.40 in December 2019 to 0.44 in December 2020, fluctuating in subsequent periods but showing an upward trend recently, reaching 0.44 in June 2023. However, it declined to 0.44 in December 2023 and further to 0.44 in December 2024.
In contrast, the quick ratio indicates a company's ability to cover short-term obligations with its most liquid assets. American Electric Power Co Inc's quick ratio also shows fluctuations, with a low of 0.23 in December 2019, improving to 0.29 by December 2020 but then declining to 0.23 by December 2021. It improved to 0.32 in March 2020 and peaked at 0.33 by September 30, 2024.
The cash ratio, which measures a company's ability to cover its short-term debts solely with its cash and cash equivalents, has been relatively low for American Electric Power Co Inc. It started at 0.04 in December 2019, rose to 0.16 by September 2021, but then fluctuated around 0.05 in subsequent periods, showing slight declines by the end of 2024.
Overall, while the company's current ratio has shown some improvement and stability in recent periods, its quick ratio and cash ratio have been relatively low, indicating weaker liquidity positions in those respects. Monitoring these ratios closely is important for assessing the company's ability to meet its short-term financial obligations with ease.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -14.63 | -193.45 | -49.26 | -19.89 | -163.06 | -247.23 | -245.47 | -431.29 | -370.24 | -380.27 | -264.54 | -417.43 | -213.50 | -145.57 | -150.54 | -135.25 | -125.91 | -108.80 | -134.91 | -390.30 |
The cash conversion cycle of American Electric Power Co Inc has exhibited fluctuations over the periods analyzed. The company had a negative cash conversion cycle, indicating efficient management of its operating cycle and working capital. However, the cycle varied significantly from a low of -14.63 days to a high of -431.29 days during the period under review.
The unusually long cash conversion cycle observed in some quarters may warrant further investigation to understand the drivers behind these variations. A negative cash conversion cycle typically implies that the company is able to collect cash from customers before paying its suppliers, leading to a potentially advantageous position in terms of liquidity and operational efficiency.
It is essential for stakeholders to closely monitor the company's cash conversion cycle trends to assess the effectiveness of its working capital management and overall financial performance.