MGE Energy Inc (MGEE)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.52 | 1.08 | 1.69 | 1.10 | 1.41 |
| Quick ratio | 0.68 | 0.54 | 0.97 | 0.63 | 0.76 |
| Cash ratio | 0.07 | 0.05 | 0.15 | 0.23 | 0.18 |
MGE Energy Inc's liquidity ratios indicate the company's ability to meet its short-term financial obligations. The current ratio has shown fluctuations over the past five years, ranging from a low of 1.08 in 2022 to a high of 1.69 in 2021. In 2023, the current ratio improved to 1.52, suggesting that the company's current assets are sufficient to cover its current liabilities.
The quick ratio, which measures the company's ability to meet short-term obligations with its most liquid assets, also improved to 0.68 in 2023 from 0.54 in 2022. While the quick ratio remains below 1, indicating that a portion of current liabilities may not be covered by liquid assets, the upward trend over the past two years shows an improvement in MGE Energy Inc's liquidity position.
The cash ratio, which provides a more stringent measure of liquidity by considering only cash and cash equivalents, has shown fluctuations over the years. In 2023, the cash ratio increased to 0.07, indicating that the company holds $0.07 in cash and cash equivalents for every dollar of current liabilities.
Overall, MGE Energy Inc has shown improvements in its liquidity ratios in 2023, suggesting a stronger ability to meet short-term obligations. However, it is essential for the company to continue monitoring and managing its liquidity position to ensure ongoing financial stability.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 115.10 | 279.06 | -227.74 | -145.86 | -180.31 |
The cash conversion cycle of MGE Energy Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle stands at 115.10 days, showing a significant improvement from 2022 where it was 279.06 days. The negative cash conversion cycles in 2021, 2020, and 2019 indicate that MGE Energy Inc was efficiently managing its working capital during those years, with the ability to convert inventory and receivables into cash quickly.
Overall, the trend suggests that MGE Energy Inc has been successful in managing its cash conversion cycle more effectively in recent years, which is a positive sign for the company's financial health and operational efficiency. It indicates that the company may have improved its inventory management, accounts receivable collection, and accounts payable payment processes. However, a high cash conversion cycle in periods such as 2022 could indicate inefficiencies in managing working capital, potentially leading to liquidity challenges.