Duke Energy Corporation (DUK)

The liquidity ratios of Duke Energy Corp. indicate the company's ability to meet its short-term financial obligations. Looking at the data provided, the current ratio has been trending upward over the past five years, from 0.62 in 2019 to 0.74 in 2023. This suggests that the company's current assets relative to its current liabilities have improved, indicating a better short-term financial position.

In comparison, the quick ratio, which measures the company's ability to meet short-term obligations with its most liquid assets, has also shown an increasing trend from 0.40 in 2019 to 0.49 in 2023. This indicates that Duke Energy Corp. has a sufficient level of highly liquid assets to cover its immediate liabilities, which is a positive sign for the company's liquidity position.

The cash ratio, which is the most conservative measure of liquidity, has also improved over the years from 0.19 in 2019 to 0.25 in 2023. This indicates that Duke Energy Corp. has a higher proportion of cash and cash equivalents relative to its current liabilities, providing further evidence of the company's ability to meet its short-term obligations with ease.

Overall, the increasing trend in all three liquidity ratios suggests that Duke Energy Corp. has been effectively managing its short-term liquidity position, which is essential for the company to sustain its operations and financial health.

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Additional liquidity measure

The cash conversion cycle of Duke Energy Corp. demonstrates a fluctuating trend over the past five years.

In 2023, the company's cash conversion cycle significantly increased to 54.30 days, indicating it took Duke Energy 54.30 days on average to convert its investments in inventory and other resources into cash receipts from customers. This represents a substantial increase from the previous year.

The spike in the cash conversion cycle in 2023 could suggest potential issues with inventory management, slower collection of receivables, or elongated payment cycles to suppliers. The company may need to focus on improving operational efficiency and managing working capital more effectively to reduce the length of the cash conversion cycle.

In 2022, the cash conversion cycle was comparatively lower at 13.56 days, indicating a relatively efficient conversion of resources into cash flows. However, in the subsequent years, the cycle has increased, pointing to potential challenges in the company's working capital management.

It is essential for Duke Energy Corp. to closely monitor and optimize its cash conversion cycle to ensure a healthy cash flow position, effective resource utilization, and sustainable business operations. A consistent focus on working capital efficiency and improvement in operational processes can help the company enhance its financial performance and overall profitability in the long run.