Atmos Energy Corporation (ATO)

The liquidity ratios of Atmos Energy Corporation over the past five years show varying levels of liquidity position.

1. Current Ratio:
- The current ratio measures the company's ability to meet its short-term obligations with its current assets.
- A current ratio below 1 indicates that the company may have difficulty meeting its short-term obligations.
- Atmos Energy's current ratio has fluctuated over the years, ranging from 0.60 in 2020 to 0.94 in 2024. This indicates some improvement in liquidity position in the latest year compared to previous years.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets.
- A quick ratio below 1 indicates that the company may struggle to meet its short-term obligations without relying on the sale of inventory.
- Atmos Energy's quick ratio has shown significant volatility, with a negative value in 2023 and 2024, indicating that the company may not have sufficient liquid assets to meet its short-term obligations without selling inventory or other current assets.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity metric, focusing solely on the company's ability to cover its short-term obligations with cash and cash equivalents.
- A cash ratio below 1 suggests that the company may not have enough cash on hand to cover its short-term liabilities.
- Atmos Energy's cash ratio has also fluctuated over the years, reaching its highest level in 2024 at 0.25, which indicates some improvement in the company's cash position compared to negative values in 2022 and 2023.

Overall, the liquidity ratios of Atmos Energy Corporation reveal a mixed performance in terms of its ability to meet short-term obligations. It is important for the company to continue monitoring and managing its liquidity position to ensure financial stability and meet its payment obligations on time.

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Additional liquidity measure

The cash conversion cycle for Atmos Energy Corporation has demonstrated fluctuations over the past five years. In the most recent reporting period as of September 30, 2024, the company's cash conversion cycle decreased to 65.86 days, showing an improvement compared to the previous years. This suggests that Atmos Energy Corporation has been managing its cash, inventory, and receivables more efficiently, resulting in a shorter cycle to convert its resources into cash.

In comparison to the prior years, the cash conversion cycle was higher in 2023 at 91.04 days, indicating a longer period required to convert investments in inventory and receivables into cash. The cycle was even longer in 2022 at 110.27 days, and although it decreased slightly in 2021 to 99.69 days, it remained relatively high. In 2020, the cycle was at 91.85 days, similar to the 2023 level.

Overall, the decreasing trend in the cash conversion cycle from 2022 to 2024 reveals that Atmos Energy Corporation has been improving its operating efficiency and liquidity management. However, it is essential for the company to continue monitoring and optimizing its cash conversion cycle to ensure optimal utilization of its resources and maintain a healthy financial position in the future.