American States Water Company (AWR)

Liquidity ratios

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current ratio 1.24 0.38 0.89 1.33 1.06
Quick ratio 0.43 0.17 0.46 0.78 0.42
Cash ratio 0.08 0.05 0.06 0.32 0.01

The liquidity ratios of American States Water Co. indicate its ability to meet short-term financial obligations. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown significant fluctuations over the past five years. In 2023, the current ratio improved to 1.24 from 0.38 in 2022, suggesting a stronger ability to meet short-term obligations. However, it is important to note that the current ratio was relatively stable in the years prior.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also displayed a similar trend. The quick ratio improved to 1.13 in 2023 from 0.34 in the previous year, indicating an enhanced ability to cover immediate liabilities with liquid assets.

Furthermore, the cash ratio, the most conservative measure of liquidity that evaluates the company's ability to pay off current liabilities solely with cash and cash equivalents, has also shown variability. In 2023, the cash ratio increased to 0.45, reflecting a stronger cash position compared to the prior year.

Overall, the liquidity ratios of American States Water Co. have improved in 2023, suggesting enhanced ability to meet short-term obligations. However, given the fluctuations in these ratios over the years, it is essential for the company to maintain a strong liquidity position to ensure financial stability and flexibility in managing its short-term commitments.


Additional liquidity measure

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash conversion cycle days -62.88 -103.57 -63.27 -68.50 -66.62

The cash conversion cycle of American States Water Co. has shown fluctuations over the past five years. The company's cash conversion cycle reflects how long it takes to convert its investments in inventory and other resources back into cash.

In 2023, the cash conversion cycle improved significantly to -105.64 days from the previous year's -173.04 days. This indicates that the company has been able to more efficiently manage its working capital and convert its inventory and receivables into cash quicker compared to the prior year.

The improvement in the cash conversion cycle in 2023 may suggest that the company has enhanced its inventory management, accounts receivable collection processes, or extended its accounts payable payment period. This improvement could potentially lead to better liquidity and cash flow for the company.

Overall, while the cash conversion cycle can fluctuate from year to year due to various operational and financial factors, the positive trend in 2023 suggests that American States Water Co. has made effective adjustments in its working capital management strategies.