MGE Energy Inc (MGEE)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 1.81 1.52 1.08 1.69 1.10
Quick ratio 0.94 0.68 0.54 0.97 0.63
Cash ratio 0.17 0.07 0.05 0.15 0.23

MGE Energy Inc's current ratio has shown fluctuating trends over the past five years, with values ranging from a low of 1.08 to a high of 1.81. The current ratio improved notably from 2020 to 2021, indicating the company's ability to meet its short-term obligations with its current assets. However, the current ratio dipped in 2022 before gradually increasing in the following years.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also exhibited variability, ranging from 0.54 to 0.97 over the same period. Despite the fluctuations, the quick ratio generally showed an upward trend from 2020 to 2024, suggesting an improvement in the company's ability to meet immediate payment obligations without relying on inventory.

The cash ratio, representing the most conservative liquidity measure by considering only cash and cash equivalents in relation to current liabilities, demonstrated a similar pattern of fluctuation, with values ranging from 0.05 to 0.23. The cash ratio was lowest in 2022 and highest in 2020, with a slight increase observed in the most recent year, 2024.

Overall, MGE Energy Inc's liquidity ratios indicate a mixed performance in terms of its ability to cover short-term obligations. While the current and quick ratios generally improved over the five-year period, the fluctuations in the cash ratio suggest varying levels of liquidity risk management. Investors and stakeholders may want to monitor these ratios closely to assess the company's ongoing liquidity position.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days -86.71 165.60 335.21 -169.31 -94.23

The cash conversion cycle (CCC) is a key metric that indicates how efficiently a company manages its cash flows related to its operations.

MGE Energy Inc's CCC has fluctuated significantly over the past five years, indicating varying efficiency in converting its investments in operations into cash flows.

As of December 31, 2020, the company had a negative CCC of -94.23 days, implying that it was able to convert its inventory and accounts receivables into cash quickly, which can indicate strong liquidity and operational efficiency.

By December 31, 2021, the CCC further decreased to -169.31 days, suggesting a continued trend of efficient cash conversion cycles.

However, in December 31, 2022, there was a substantial increase in the CCC to 335.21 days, indicating a potential delay in converting investments into cash flows, which could be a concern for the company's liquidity position.

The trend reversed by December 31, 2023, with the CCC reducing to 165.60 days, signaling an improvement in efficiency in managing cash flows.

Finally, as of December 31, 2024, the CCC stood at -86.71 days, similar to the levels seen in the earlier years, pointing to efficient operations in converting assets into cash.

Overall, while MGE Energy Inc has shown fluctuations in its cash conversion cycle over the years, the negative values in certain periods suggest that the company has been effective in managing its working capital and turning investments into cash efficiently. However, the substantial positive CCC observed in 2022 indicates a potential area for improvement in managing cash flows effectively.