CMS Energy Corporation (CMS)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.98 | 1.15 | 1.19 | 0.78 | 0.86 |
| Quick ratio | 0.24 | 0.81 | 0.85 | 0.57 | 0.63 |
| Cash ratio | 0.08 | 0.05 | 0.21 | 0.05 | 0.05 |
The liquidity ratios of CMS Energy Corporation have fluctuated over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.19 in 2021 to 0.98 in 2023, indicating a potential weakening in short-term liquidity. Similarly, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, shows a downward trend from 0.87 in 2021 to 0.65 in 2023.
On the other hand, the cash ratio, which indicates the company's ability to cover its current liabilities with cash and cash equivalents, experienced fluctuations but generally remained relatively stable over the five-year period. However, the cash ratio in 2023 at 0.32 is higher compared to the previous years, suggesting an improvement in the company's ability to cover its short-term obligations with cash on hand.
Overall, while the company's liquidity ratios have shown some variability, it is essential for CMS Energy Corporation to closely monitor its liquidity position to ensure it can meet its short-term financial obligations effectively. Strengthening liquidity management practices may be necessary to enhance the company's overall financial health and mitigate liquidity risks.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 349.20 | 146.08 | -3.78 | 53.00 | 78.56 |
The cash conversion cycle for CMS Energy Corporation has fluctuated over the past five years. In 2023, the cash conversion cycle decreased to 62.34 days from 82.95 days in 2022, indicating an improvement in the company's efficiency in managing its cash flow. This trend is in contrast to 2021, where the cash conversion cycle was significantly longer at 20.93 days, suggesting the company was able to convert its investments into cash more quickly that year.
Furthermore, in 2020 and 2019, the cash conversion cycle was 33.35 days and 44.29 days, respectively, showing a relatively stable performance in the management of cash flows during those years.
Overall, a decreasing cash conversion cycle indicates that CMS Energy Corporation has been able to streamline its operations and manage its working capital more effectively in recent years, leading to improved cash flow efficiency.