Dominion Energy Inc (D)

Based on the provided data, we can analyze the liquidity ratios of Dominion Energy Inc over the five-year period.

1. Current Ratio:
- The current ratio measures a company's ability to pay its short-term obligations with its current assets.
- Dominion Energy's current ratio has shown fluctuation over the years, ranging from a low of 0.64 in 2020 to a high of 1.17 in 2024.
- A current ratio below 1 indicates that a company may have difficulty meeting its short-term obligations. Dominion Energy's current ratio improved over the years, reaching a healthy level of 1.04 in 2023 and 1.17 in 2024, showing an enhanced ability to cover its current liabilities.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
- Dominion Energy's quick ratio was very low in 2021 at 0.03, indicating a potential liquidity concern. However, it improved in the following years, although it remained relatively low, ranging from 0.03 to 0.30.
- A quick ratio below 1 may suggest that the company could face challenges in meeting immediate obligations without relying on the sale of inventory. Dominion Energy's quick ratio improved over the years but remained relatively low, warranting further monitoring.

3. Cash Ratio:
- The cash ratio is the most conservative measure of liquidity and assesses a company's ability to cover its current liabilities with its cash and cash equivalents.
- Dominion Energy's cash ratio mirrored the trends seen in the quick ratio, starting at 0.29 in 2020 and reaching 0.05 in 2024.
- A cash ratio below 1 signifies that a company may not have sufficient cash on hand to cover its immediate liabilities. Dominion Energy exhibited a declining trend in the cash ratio over the years, which may indicate a decreasing ability to cover short-term obligations solely with cash reserves.

In conclusion, while Dominion Energy's current ratio improved significantly over the years, reaching a healthy level by 2023 and 2024, the quick and cash ratios remained relatively low, indicating potential liquidity challenges if the company needs to meet immediate obligations without relying on inventory or other current assets. Further analysis and monitoring of the company's liquidity position are warranted to ensure its financial health and stability.

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Additional liquidity measure

The cash conversion cycle of Dominion Energy Inc has shown some fluctuations over the past five years. As of December 31, 2020, the company had a cash conversion cycle of 82.35 days, indicating that it took approximately 82 days for Dominion Energy to convert its investments in inventory and accounts receivable into cash.

By December 31, 2021, the cash conversion cycle increased to 99.10 days, suggesting a longer period for Dominion Energy to convert its investments into cash. This could indicate potential inefficiencies in managing its working capital during that period.

In the following years, the cash conversion cycle improved slightly, dropping to 83.47 days by December 31, 2022, 83.36 days by December 31, 2023, and 85.43 days by December 31, 2024. While there were fluctuations, the overall trend shows a moderate improvement in the efficiency of Dominion Energy's working capital management.

Analyzing the cash conversion cycle can provide insights into how effectively a company manages its cash flow, inventory, and receivables. A shorter cycle indicates that the company is able to generate cash more quickly from its operating activities, which is generally a positive sign. Dominion Energy's efforts to optimize its cash conversion cycle over the years suggest a commitment to improving its working capital efficiency.