Avista Corporation (AVA)

Avista Corp.'s liquidity ratios indicate its ability to meet short-term financial obligations. The current ratio has shown improvement over the past five years, although it is below 1, which may suggest potential difficulty in meeting current liabilities with current assets alone. The quick ratio also demonstrates a similar trend of improvement but remains consistently below 1, indicating that Avista may struggle to meet its short-term obligations if they all come due immediately.

The cash ratio has shown a steady increase over the years, indicating a positive trend in Avista's ability to cover its short-term liabilities with its most liquid assets. However, the cash ratio is still relatively low, suggesting that Avista may need to rely on other sources of liquidity to cover its obligations promptly.

Overall, Avista Corp. should continue to monitor and improve its liquidity position to ensure it can meet its short-term obligations efficiently. This can be achieved by managing current assets and liabilities effectively and maintaining a balance between liquidity and profitability.

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Additional liquidity measure

The cash conversion cycle of Avista Corp. has shown some variability over the last five years. In 2023, the company's cash conversion cycle increased significantly to 59.95 days from 13.88 days in 2022. This suggests that Avista Corp. took longer to convert its investment in inventory into cash from sales, indicating potential issues with managing inventory levels or collecting receivables.

Comparing this to the previous years, in 2021 the cash conversion cycle was 23.50 days, which was slightly higher than the 23.11 days in 2020. In 2019, the cash conversion cycle was 11.99 days, indicating more efficient management of working capital.

Overall, the increasing trend in the cash conversion cycle from 2019 to 2023 may raise concerns about Avista Corp.'s ability to efficiently manage its working capital and convert its investments into cash. Further analysis of the company's inventory management, accounts receivable collection, and accounts payable policies may be warranted to address the lengthening cash conversion cycle.