Entergy Corporation (ETR)

Entergy Corporation's liquidity ratios have shown a declining trend over the years based on the provided data. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 0.65 in 2020 to 0.57 in 2023 before slightly improving to 0.75 in 2024. This indicates a potential strain on the company's ability to meet its short-term obligations.

Similarly, the quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, also saw a significant decrease from 0.48 in 2020 to 0.03 in 2023, before recovering slightly to 0.15 in 2024. This suggests that Entergy's ability to meet its immediate liabilities without relying on inventory has weakened over the years.

The cash ratio, which is the most conservative liquidity ratio focusing solely on a company's ability to cover its current liabilities with its cash and cash equivalents, followed a similar pattern with a decline from 0.48 in 2020 to 0.03 in 2023, before improving to 0.15 in 2024.

Overall, the declining trend in all three liquidity ratios indicates potential liquidity challenges for Entergy Corporation during the period analyzed. Management may need to closely monitor and improve the company's liquidity position to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Entergy Corporation has fluctuated over the years. As of December 31, 2020, the company had a cash conversion cycle of 73.26 days, which decreased to 63.54 days by December 31, 2021. Subsequently, the cycle further reduced to 57.23 days by December 31, 2022, indicating an improvement in efficiency.

However, there was an increase in the cash conversion cycle to 86.29 days by December 31, 2023, which suggests that the company may have faced challenges in managing its working capital effectively during that period. The cycle then significantly increased to 106.83 days by December 31, 2024, which could indicate potential issues in cash flow management or prolonged inventory turnover.

Overall, a longer cash conversion cycle can tie up cash and impact liquidity, while a shorter cycle indicates that the company is efficiently managing its operational cash flows. Entergy Corporation should continue to monitor and optimize its cash conversion cycle to maintain healthy working capital management.