Chesapeake Utilities Corporation (CPK)

The current ratio of Chesapeake Utilities Corporation has shown a gradual improvement from 0.41 in 2020 to 0.49 in 2024. This indicates that the company's ability to meet its short-term obligations with its current assets has strengthened over the years. However, the current ratio is still relatively low, suggesting that the company may face challenges in meeting its short-term liabilities.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a slight improvement from 0.01 in 2021 to 0.02 in 2024. This indicates that while the company's ability to meet its short-term liabilities using its most liquid assets has increased slightly, it still remains at a very low level.

The cash ratio, which measures the company's ability to cover its short-term liabilities with its cash and cash equivalents, has also shown a marginal improvement from 0.01 in 2021 to 0.02 in 2024. This suggests that the company has a very limited amount of cash available to cover its immediate obligations, which implies a potential liquidity risk.

Overall, while there have been slight improvements in Chesapeake Utilities Corporation's liquidity ratios over the years, the ratios still indicate a relatively low level of liquidity and the company may need to closely monitor its ability to meet its short-term obligations using its current assets and cash reserves.

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Additional liquidity measure

The cash conversion cycle for Chesapeake Utilities Corporation has shown a fluctuating trend over the past five years. It increased from 14.13 days as of December 31, 2020, to 25.68 days as of December 31, 2023, before slightly decreasing to 21.70 days as of December 31, 2024. This indicates that the company is taking longer to convert its investments in raw materials into cash receipts from sales.

A longer cash conversion cycle may suggest inefficiencies in inventory management, accounts receivable collection, or accounts payable payment processes. It implies that Chesapeake Utilities Corporation may be experiencing delays in collecting cash from customers relative to the time it takes to pay its suppliers and manage inventories.

Management should focus on optimizing inventory levels, improving accounts receivable collection processes, and negotiating favorable payment terms with suppliers to shorten the cash conversion cycle. By doing so, the company can enhance its cash flow management and overall operational efficiency.