H2O America (HTO)

The liquidity position of H2O America over the analyzed period reveals noteworthy trends across its current, quick, and cash ratios.

The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, exhibits fluctuations but generally maintains a low level. It started at 0.51 on September 30, 2020, and declined further to 0.36 by December 31, 2020. Subsequently, the ratio experienced some recovery, reaching a peak of 0.91 in March 2023, indicating an improvement in current assets relative to current liabilities. However, after this peak, the ratio declined again, ending at 0.64 in June 2025. Throughout the period, the current ratio remains below 1, signaling consistent liquidity challenges and potential difficulties in meeting short-term obligations without additional liquid resources.

The quick ratio, which refines liquidity assessment by excluding less liquid assets such as inventories, follows a similar pattern. It started at 0.44 and experienced variability, dropping to a low of 0.31 in December 2020 and reaching a high of 0.68 in September 2024. Despite fluctuations, the ratio remains below 1 throughout the period, with the highest point indicating some improvement in immediate liquidity but still reflecting constrained capacity to cover short-term liabilities without relying on inventory liquidation or other assets.

The cash ratio, representing the most stringent liquidity measure by focusing solely on cash and cash equivalents, stays notably low across all periods. It begins at 0.07 in September 2020 and reaches a maximum of 0.11 in March 2023 and June 2023. Most values remain well below 0.10, with a minimal increase to 0.08 in June 2025. This persistent low level underscores a limited cash buffer for immediate liabilities, aligning with the observed low quick and current ratios.

Overall, the analysis indicates that H2O America sustains a relatively tight liquidity position, characterized by low current, quick, and cash ratios throughout the period. While there are moments of marginal improvement, particularly around 2023-2024, the ratios remain below generally accepted thresholds of 1 or higher, suggesting ongoing liquidity constraints and reliance on other asset management strategies or external financing to meet short-term obligations.

---

Additional liquidity measure

The cash conversion cycle (CCC) of H2O America exhibits notable fluctuations over the analyzed period from September 2020 to June 2025. Initially, the CCC fluctuated around an average of approximately 20 days, with a high of 35.42 days recorded at the end of September 2022, indicating a longer period to convert investments in inventory and receivables into cash. Conversely, the lowest value observed was 6.01 days at the end of December 2024, suggesting an efficient and swift cycle during that period.

Throughout this timeframe, the data indicates periods of both elongation and contraction in the CCC. For example, from September 2020 (24.55 days), the cycle decreased significantly to a low in December 2020 (16.31 days), then experienced a relative stabilization around 22–23 days through late 2021. A marked increase was observed starting mid-2022, reaching over 35 days by September 2022, which may suggest delays or inefficiencies in inventory management or receivables collection during that period.

Subsequently, a sharp decline occurred by December 2022, falling to 23.98 days, and continued improvement was seen until December 2024, when the CCC dropped to as low as 6.01 days. This significant reduction could indicate enhanced operational efficiencies, faster inventory turnover, or improved accounts receivable collection practices. The intermediate data points reflect some volatility but generally reveal an overall trend toward shorter cycle durations in recent years.

The projections for 2025 show a gradual increase again, with the CCC rising from 13.23 days in March 2025 to 18.94 days in June 2025, suggesting a slight easing but still remaining relatively low compared to the peak levels observed in 2022.

Overall, the trend highlights periods of operational efficiency improvements, notably towards the end of 2024, coupled with occasional expansions in cycle duration that could be attributable to seasonal factors, strategic changes, or market conditions. The overall pattern indicates that H2O America has managed to significantly reduce its cash conversion cycle by the end of the analyzed period, which is favorable from a liquidity and working capital management perspective.