DTE Energy Company (DTE)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.60 | 0.85 | 0.89 | 0.88 | 0.81 | 0.79 | 0.59 | 0.64 | 0.52 | 1.02 | 1.71 | 1.69 | 1.30 | 1.12 | 0.83 | 0.89 | 0.77 | 0.77 | 0.75 | 0.78 |
| Quick ratio | 0.31 | 0.40 | 0.42 | 0.45 | 0.43 | 0.40 | 0.35 | 0.38 | 0.32 | 0.56 | 0.96 | 1.25 | 0.86 | 0.73 | 0.55 | 1.05 | 0.50 | 0.46 | 0.44 | 0.50 |
| Cash ratio | 0.00 | 0.01 | 0.01 | 0.03 | 0.01 | 0.04 | 0.03 | 0.06 | 0.03 | 0.07 | 0.50 | 0.60 | 0.19 | 0.28 | 0.14 | 0.61 | 0.02 | 0.02 | 0.02 | 0.02 |
The current ratio measures DTE Energy Co.'s ability to cover its short-term liabilities with its current assets. A current ratio below 1 suggests that the company may have difficulty meeting its short-term obligations. DTE Energy's current ratio has fluctuated over the past eight quarters, ranging from a low of 0.59 to a high of 0.89, with a Q4 2023 current ratio of 0.60. This downward trend indicates a potential liquidity concern, as the current assets may not be sufficient to cover the current liabilities.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also shown variability for DTE Energy Co. over the same period. The quick ratio has ranged from 0.47 to 0.65, with the Q4 2023 quick ratio at 0.42. This further reinforces the liquidity challenges faced by the company, as it indicates that even with inventory excluded, DTE Energy may struggle to meet its short-term obligations.
Lastly, the cash ratio focuses solely on the most liquid assets, cash and cash equivalents, relative to current liabilities. DTE Energy's cash ratio has shown a decline over the past eight quarters, ranging from 0.11 to 0.23, with a Q4 2023 cash ratio of 0.11. This indicates that the company's cash position may be insufficient to cover its current liabilities, raising concerns about its ability to weather any financial shocks.
Overall, the trend in DTE Energy Co.'s liquidity ratios suggests a potential liquidity challenge, with declining current, quick, and cash ratios over the past quarters. Investors and analysts may want to closely monitor the company's liquidity position and management's efforts to improve it.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -56.26 | 32.12 | -8.34 | -71.24 | -203.39 | -186.13 | -292.19 | -175.46 | -156.87 | -107.58 | -345.14 | -300.67 | -269.64 | -15.24 | -45.98 | -78.99 | -372.39 | -47.04 | -79.26 | -111.96 |
The cash conversion cycle for DTE Energy Co. fluctuated over the past eight quarters, ranging from -16.86 days to 41.42 days. The company managed to convert its resources into cash more efficiently during Q1 2023 with a negative cycle, indicating that it was able to collect cash from its operations before paying its suppliers. However, this efficiency was not sustained in subsequent quarters, leading to longer cash conversion cycles. The highest cycle was observed in Q3 2023 at 41.34 days, indicating a delay in converting both inventory and receivables into cash.
Overall, DTE Energy Co. should focus on optimizing its cash conversion cycle to maintain healthy cash flows and working capital management. They should analyze the factors contributing to the extended cycle periods and implement strategies to streamline their operations and improve efficiency in converting resources to cash.