Dominion Energy Inc (D)

The liquidity ratios of Dominion Energy Inc have shown fluctuations over the past five years, indicating changes in the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, has improved from 0.61 in 2019 to 1.04 in 2023. This indicates that Dominion Energy Inc's current assets are now sufficient to cover its current liabilities, reflecting a stronger liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Dominion Energy Inc's quick ratio has varied over the years, with a significant increase from 0.36 in 2020 to 0.60 in 2022. However, the ratio dropped to 0.21 in 2023, suggesting a potential decrease in the company's ability to meet its short-term obligations without relying on inventory sales.

The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, has shown some instability. It improved from 0.17 in 2019 to 0.35 in 2021 but decreased to 0.11 in 2023. This downward trend in the cash ratio might signal potential challenges in using cash reserves to meet immediate obligations in the most recent year.

Overall, while the current ratio has shown improvement, the quick ratio and cash ratio have displayed mixed results over the years. It is essential to closely monitor these liquidity ratios to assess Dominion Energy Inc's ability to maintain adequate cash and liquid assets to fund its operations and meet short-term financial commitments effectively.

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Additional liquidity measure

The cash conversion cycle of Dominion Energy Inc has experienced fluctuations over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In 2023, the cash conversion cycle increased significantly to 129.97 days compared to the previous year of 64.80 days in 2022. This indicates that Dominion Energy Inc took longer to convert its investments into cash during the year.

In 2021, the cycle was 112.11 days, showing an improvement from the longer cycle in 2020 of 134.02 days. However, it was higher than the cycle in 2019 which was 108.42 days.

The fluctuations in the cash conversion cycle suggest changes in the efficiency of Dominion Energy Inc in managing its working capital, inventory levels, and accounts receivable. A longer cash conversion cycle may indicate inefficiencies or challenges in converting investments into cash, while a shorter cycle suggests improved cash flow management.

Overall, Dominion Energy Inc should strive to monitor and optimize its cash conversion cycle to enhance liquidity and operational efficiency.