Clearway Energy Inc Class C (CWEN)

Clearway Energy Inc's liquidity ratios have fluctuated significantly over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has improved from 0.30 in 2019 to 1.72 in 2023. This indicates that the company's liquidity position has strengthened over the years, with the ability to more comfortably meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Clearway Energy Inc's quick ratio has also shown improvement from 0.15 in 2019 to 1.09 in 2023. This demonstrates the company's increased ability to meet its short-term liabilities without relying on inventory.

Moreover, the cash ratio, which is the most conservative liquidity measure focusing solely on the availability of cash to cover short-term liabilities, has improved from 0.09 in 2019 to 0.71 in 2023. This suggests that Clearway Energy Inc has enhanced its ability to cover its short-term obligations with its cash reserves.

Overall, Clearway Energy Inc's liquidity ratios have shown positive trends, indicating improved liquidity and financial stability over the years. This suggests that the company may be better positioned to meet its financial obligations in the short term.

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Additional liquidity measure

The cash conversion cycle is a metric that reflects the efficiency of a company's working capital management by measuring the time it takes for a company to convert its inventories into cash receipts from customers. A shorter cash conversion cycle indicates that the company is able to quickly convert its investments in inventory and accounts receivable into cash, thus improving its liquidity.

In the case of Clearway Energy Inc, there has been significant variability in the cash conversion cycle over the past five years. In 2023, the company's cash conversion cycle was 14.04 days, showing an improvement in efficiency compared to the previous year. This suggests that Clearway Energy was able to manage its working capital more effectively, potentially by reducing the time it takes to collect payments from customers or by optimizing its inventory turnover.

On the other hand, in 2022, the company's cash conversion cycle increased to 21.76 days, indicating a slight deterioration in working capital management compared to the previous year. However, it is worth noting that Clearway Energy experienced a significant improvement in 2021, with a negative cash conversion cycle of -75.67 days. This negative value suggests that the company was able to collect cash from customers before paying its suppliers and other expenses, reflecting a highly efficient working capital management during that period.

Looking back further, in 2020 and 2019, Clearway Energy also exhibited negative cash conversion cycles of -3.34 days and -27.64 days, respectively. While these negative values indicate efficiency in working capital management, it is important to note that negative cash conversion cycles may not always be sustainable in the long term.

Overall, Clearway Energy's cash conversion cycle has shown variability over the past five years, with fluctuations in working capital efficiency. By closely monitoring and managing its cash conversion cycle, Clearway Energy can continue to improve its liquidity position and optimize its working capital management practices.