Edison International (EIX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.79 | 0.68 | 0.64 | 0.49 | 0.64 |
| Quick ratio | 0.36 | 0.31 | 0.30 | 0.25 | 0.17 |
| Cash ratio | 0.04 | 0.09 | 0.05 | 0.01 | 0.03 |
Edison International's liquidity position, as reflected in its current ratio, quick ratio, and cash ratio, has shown fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally improved from 2019 to 2021, but dropped in 2022 and 2023. The current ratio stood at 0.79 in 2023, indicating that the company may have difficulty meeting its current obligations.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also followed a similar trend as the current ratio. It increased from 2019 to 2021 but decreased in 2022 and 2023. The quick ratio was 0.73 in 2023, suggesting the company may struggle to meet its short-term liabilities without relying on inventory.
The cash ratio, the most conservative liquidity measure which assesses a company's ability to cover current liabilities with its cash and cash equivalents, has been relatively consistent over the years. The cash ratio was 0.41 in both 2023 and 2022, indicating that Edison International has enough cash on hand to cover approximately 41% of its current liabilities.
Overall, Edison International's liquidity ratios indicate a mixed liquidity position, with a declining trend in current and quick ratios in the recent financial years. Management may need to monitor the liquidity position closely and consider taking appropriate measures to ensure the company can meet its short-term obligations effectively.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -11,245.62 | -16,332.03 | -14,752.22 | 65.24 | -4,711.47 |
The trend in Edison International's cash conversion cycle over the past five years shows some fluctuations. The cycle increased from 41.21 days in 2019 to 65.24 days in 2020, indicating a longer time for the company to convert its resources into cash during that period. However, it decreased in 2021 to 53.68 days before increasing again in 2022 to 49.51 days. The cycle further increased to 61.62 days in 2023.
Overall, the cash conversion cycle for Edison International has been somewhat volatile, with fluctuations observed over the years. It is important for the company to closely monitor and manage its cash conversion cycle to ensure operational efficiency and effective management of working capital.