American Water Works (AWK)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 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
Current ratio 0.39 0.58 0.64 0.85 0.65 1.03 1.13 0.71 0.44 0.48 0.59 0.52 0.73 0.86 0.92 0.60 0.66 0.87 0.90 0.65
Quick ratio 0.27 0.46 0.48 0.71 0.52 0.83 0.92 0.52 0.31 0.34 0.44 0.37 0.30 0.37 0.38 0.24 0.38 0.50 0.51 0.37
Cash ratio 0.03 0.10 0.07 0.35 0.18 0.40 0.49 0.15 0.05 0.05 0.06 0.06 0.06 0.05 0.05 0.03 0.19 0.26 0.28 0.20

American Water Works' liquidity ratios reflect a fluctuating trend over the past few years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, shows a decline from 0.65 as of March 31, 2020, to 0.39 by December 31, 2024. The quick ratio, which provides a more stringent evaluation by excluding inventories from current assets, follows a similar downward trajectory, dropping from 0.37 in March 2020 to 0.27 by December 31, 2024.

The cash ratio, indicating the company's ability to pay off current liabilities with its cash and cash equivalents, displays notable variation. While there are periods of improvement, such as an increase from 0.03 in March 2021 to 0.49 in June 2023, the ratio experiences fluctuations and ends at 0.03 by December 31, 2024.

Overall, the liquidity ratios of American Water Works suggest a need for close monitoring, especially in managing short-term financial obligations and enhancing the company's cash position for improved liquidity stability.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 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
Cash conversion cycle days -1,371.21 -998.15 -667.25 -757.69 -1,214.55 -1,000.89 -1,151.07 -734.95 -1,319.06 -935.75 -31.20 -0.87 -8.56 22.08 26.72 23.59 8.91 21.39 14.76 15.33

The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. In the case of American Water Works, the trend in the cash conversion cycle has shown fluctuations over the periods analyzed.

From March 31, 2020, to December 31, 2021, the company's cash conversion cycle ranged from 8.91 to 26.72 days, indicating some level of variability in managing its cash flows. However, starting from December 31, 2021, the cash conversion cycle turned negative, which suggests that American Water Works is able to convert its investments into cash and then back into investments at a faster rate than it acquires new resources.

The significant negative values observed from September 30, 2022, to December 31, 2024, indicate that American Water Works is efficiently managing its working capital, possibly through improved inventory management, faster collection of receivables, and more flexible payment terms with suppliers. Although negative cash conversion days indicate efficiency, continual negative values may also signal excessively tight liquidity management or issues with planning for future resource needs.

Overall, the cash conversion cycle analysis reflects American Water Works' ability to effectively manage its working capital and generate cash flows, potentially leading to improved financial performance and sustainable operations in the long term.