Kinder Morgan Inc (KMI)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.35 | 0.55 | 0.66 | 0.63 | 0.63 |
| Quick ratio | 0.23 | 0.38 | 0.50 | 0.50 | 0.49 |
| Cash ratio | 0.01 | 0.11 | 0.22 | 0.23 | 0.22 |
The liquidity ratios of Kinder Morgan Inc, as reflected in the table, have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has decreased from 0.63 in 2019 to 0.35 in 2023. This suggests that Kinder Morgan may face challenges in meeting its immediate financial obligations.
Similarly, the quick ratio, which excludes inventory from current assets, also exhibited a downward trend from 0.56 in 2019 to 0.28 in 2023. This indicates that the company may have difficulty in meeting its short-term liabilities with its most liquid assets.
Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has decreased significantly from 0.29 in 2019 to 0.06 in 2023. This implies that Kinder Morgan may have limited cash reserves to address its immediate financial needs.
Overall, the declining liquidity ratios of Kinder Morgan Inc raise concerns about its short-term financial health and ability to meet its upcoming financial obligations. It is essential for the company to closely monitor and manage its liquidity position to ensure it remains financially stable in the future.
See also:
Kinder Morgan Inc Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -14.35 | 6.88 | 8.36 | 7.11 | -8.85 |
The cash conversion cycle measures how efficiently a company manages its working capital by evaluating the time it takes to convert resources invested in the production process into cash flows received from the sale of products or services. A negative cash conversion cycle indicates that the company can pay its suppliers with the collected cash from customers before actually disbursing payment for the goods it purchased.
From 2019 to 2023, Kinder Morgan Inc's cash conversion cycle exhibited fluctuating trends. In 2019 and 2020, the company had negative cash conversion cycles, indicating efficient working capital management and the ability to collect cash from customers before paying suppliers. However, in 2021 and 2022, the cycle turned positive, implying a delay in cash collection relative to payment to suppliers.
The sharp improvement in 2023, with a significant decrease in the cash conversion cycle to -24.36 days, suggests that Kinder Morgan Inc has made notable progress in optimizing its working capital management. Negative cycles indicate the company is receiving cash from customers more quickly than it is paying suppliers, improving its liquidity position and operating efficiency. Overall, the latest data reflects positive trends in Kinder Morgan Inc's cash conversion cycle, signaling improved working capital dynamics.