DTE Energy Company (DTE)

The liquidity ratios of DTE Energy Co. provide insight into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown fluctuations over the years. In 2023, the current ratio decreased to 0.60 from 0.81 in 2022, indicating a potential weakening in the company's liquidity position. However, the current ratio in 2020 was significantly higher at 1.30, 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. Like the current ratio, the quick ratio of DTE Energy Co. has also fluctuated. In 2023, the quick ratio decreased to 0.42 from 0.62 in 2022. This ratio indicates that the company may have difficulties covering its short-term obligations without relying on inventory or other less liquid assets.

The cash ratio, which is the most conservative liquidity ratio, focuses solely on cash and cash equivalents as a percentage of current liabilities. DTE Energy Co.'s cash ratio has shown variability over the years, with a significant drop from 0.37 in 2020 to 0.11 in 2021. This decrease suggests a potential constraint on the company's ability to pay off its short-term liabilities solely with its cash holdings.

Overall, the liquidity ratios of DTE Energy Co. reflect some fluctuations in its ability to meet short-term obligations. Management should closely monitor these ratios and ensure adequate liquidity levels to support the company's operations and financial health.

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Additional liquidity measure

The cash conversion cycle of DTE Energy Co. has fluctuated over the past five years. In 2023, the company's cash conversion cycle decreased to 33.27 days from 41.42 days in 2022, indicating an improvement in the management of its working capital. This means that DTE Energy Co. was able to convert its investments in inventory and accounts receivable into cash more efficiently during this period.

Comparing to 2021, the cash conversion cycle increased from 22.60 days to 41.42 days in 2022, suggesting a slowdown in the company's ability to turn its resources into cash. However, the company managed to reverse this trend in 2023.

In 2020 and 2019, DTE Energy Co. had longer cash conversion cycles of 53.71 days and 54.37 days, respectively. This indicates that the company took a longer time to convert its investments into cash during those years compared to the more recent periods.

Overall, the recent improvement in the cash conversion cycle of DTE Energy Co. suggests better liquidity management and operational efficiency, which can be beneficial for the company's financial health and performance.