CenterPoint Energy Inc (CNP)

Centerpoint Energy Inc.'s liquidity ratios show varying levels of short-term solvency over the past five years. The current ratio has seen fluctuations, ranging from a low of 0.61 in 2020 to a high of 1.72 in 2021, indicating the company's ability to cover its short-term obligations with its current assets. However, the current ratio has decreased to 0.78 in 2023, which may raise concerns about Centerpoint Energy's liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows fluctuations over the same period. The quick ratio has ranged between 0.50 in 2020 and 1.03 in 2021, with a value of 0.58 in 2023. This suggests that Centerpoint Energy's ability to meet its short-term liabilities with its most liquid assets has weakened in the most recent year.

The cash ratio, the most stringent measure of liquidity as it only considers cash and cash equivalents, has also varied significantly for Centerpoint Energy. The cash ratio has ranged between 0.24 in 2020 and 0.75 in 2021, indicating the company's ability to cover its current liabilities with its cash holdings. However, the cash ratio has decreased to 0.24 in 2023. This may indicate potential challenges in meeting immediate financial obligations with available cash.

Overall, Centerpoint Energy Inc.'s liquidity ratios have shown fluctuations over the past five years, with a downward trend in 2023. Investors and analysts may need to further investigate the reasons behind these shifts in liquidity ratios to assess the company's short-term financial health and ability to meet its obligations.

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Additional liquidity measure

The cash conversion cycle for Centerpoint Energy Inc. has shown variability over the past five years. In 2023, the company's cash conversion cycle increased to 30.56 days from 9.30 days in 2022, indicating that the company took longer to convert its investments in inventory and accounts receivable into cash. This could be a result of factors such as slower sales, extended inventory holding periods, or delays in collecting receivables.

Compared to 2021, when the cash conversion cycle was negative at -39.30 days, the company had significantly improved its efficiency in converting investments into cash. A negative cash conversion cycle implies that the company was able to collect cash from customers before paying its suppliers, resulting in a favorable position in terms of working capital management.

In 2020 and 2019, the cash conversion cycles were also negative at -11.69 days and 19.76 days, respectively. These negative values indicate that Centerpoint Energy Inc. was effectively managing its working capital by efficiently converting its investments into cash within a shorter period.

Overall, the trend in Centerpoint Energy Inc.'s cash conversion cycle suggests fluctuations in the efficiency of its working capital management over the past five years. It is essential for the company to closely monitor and address factors that may be leading to longer cash conversion cycles to ensure optimal utilization of its resources and maintain healthy liquidity levels.