Exelon Corporation (EXC)

Exelon Corporation's liquidity ratios provide insight into its ability to meet short-term obligations with its current assets. The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, has shown fluctuation over the years. In 2020, the current ratio was 0.98, indicating that Exelon had almost enough current assets to cover its short-term obligations. However, this ratio has declined to 0.87 in 2021, 0.69 in 2022, and then improved slightly to 0.82 in 2023 and 0.87 in 2024.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows a declining trend over the years. In 2020, the quick ratio was 0.42, indicating that Exelon had limited quick assets to cover its immediate liabilities. This ratio decreased to 0.39 in 2021 and 2022, then increased marginally to 0.43 in 2024.

Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has been relatively low for Exelon. In 2020, the cash ratio was 0.05, indicating that Exelon held only 5% of its current liabilities in cash. This ratio improved slightly to 0.07 in 2021, then declined to 0.04 in 2022 and remained at 0.04 in 2024.

Overall, Exelon's liquidity ratios reflect a mixed performance in terms of its ability to meet short-term obligations. The declining trends in the current ratio and the quick ratio may raise concerns about Exelon's liquidity position, although the slight improvements in these ratios in recent years show efforts to strengthen liquidity. The consistently low cash ratio highlights a potential need for the company to enhance its cash position to better cover short-term liabilities.

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Additional liquidity measure

The cash conversion cycle of Exelon Corporation has shown significant fluctuations over the years based on the provided data.

As of December 31, 2020, the company had a relatively low cash conversion cycle of 35.26 days, indicating an efficient management of its working capital. However, by December 31, 2021, the cash conversion cycle increased substantially to 86.88 days, suggesting that Exelon took longer to convert its investments in inventory and receivables into cash during that period.

Interestingly, by December 31, 2022, the cash conversion cycle turned negative to -105.04 days. This indicates that Exelon was able to convert its investments into cash at a faster rate than the time it took to pay off its liabilities, which could signify an efficient management of working capital, albeit with potential risks.

By December 31, 2023, the cash conversion cycle increased significantly to 107.41 days, indicating a prolonged period for Exelon to convert its working capital into cash. And by December 31, 2024, the cash conversion cycle further increased to 112.17 days, reflecting a potential slowdown in the company's cash conversion efficiency.

Overall, Exelon Corporation's cash conversion cycle has shown considerable variability over the years, with fluctuations in efficiency levels that may require further examination and analysis to understand the underlying reasons and implications.