IDACORP Inc (IDA)

The liquidity ratios of IDACORP Inc indicate fluctuations in its short-term financial strength over the years. The current ratio, measuring the company's ability to cover its short-term obligations with current assets, decreased from 2.23 in 2020 to 1.41 in 2024, indicating a decline in liquidity. However, the ratio remained above 1 in all years, suggesting the company had sufficient current assets to meet its short-term commitments.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, decreased from 1.04 in 2020 to 0.53 in 2024. This decline indicates a reduction in the company's ability to quickly cover its short-term liabilities with its most liquid assets. Despite the decrease, the quick ratio in 2022 was unusually high at 5.10, possibly due to a significant increase in liquid assets during that year.

The cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, showed a similar trend as the quick ratio, decreasing from 1.04 in 2020 to 0.53 in 2024. This indicates a decrease in the company's ability to meet its short-term obligations with its cash reserves alone, which could be a concerning sign if the trend persists.

Overall, IDACORP Inc's liquidity position appears to have deteriorated over the years, as evidenced by decreasing current, quick, and cash ratios. It would be important for the company to closely monitor its liquidity levels and ensure it maintains an appropriate level of liquidity to meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle is a key financial metric that measures the effectiveness of IDACORP Inc's cash management and operational efficiency.

From the data provided:
- As of December 31, 2020, the cash conversion cycle was 33.95 days.
- By December 31, 2021, the cycle improved to 30.99 days, indicating a decrease in the time it takes to convert invested resources into cash.
- This trend continued in 2022, with the cycle further decreasing to 29.79 days, reflecting a more efficient conversion process.
- However, by December 31, 2023, the cash conversion cycle increased to 40.41 days, suggesting a delay in the conversion of resources to cash.
- The most notable change occurred by December 31, 2024, where the cycle spiked significantly to 210.13 days. This is a concerning trend as a longer cash conversion cycle may indicate operational inefficiencies or potential liquidity issues.

Overall, the fluctuating trend in the cash conversion cycle for IDACORP Inc reflects varying efficiency in managing working capital and converting investments into cash. It is essential for the company to closely monitor and analyze this metric to ensure optimal liquidity management and operational performance in the future.