MGE Energy Inc (MGEE)
Cash ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 11,140 | 11,604 | 17,438 | 44,738 | 23,481 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 157,156 | 225,062 | 117,847 | 190,926 | 128,820 |
| Cash ratio | 0.07 | 0.05 | 0.15 | 0.23 | 0.18 |
December 31, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($11,140K
+ $—K)
÷ $157,156K
= 0.07
The cash ratio measures the ability of a company to cover its short-term obligations using only its cash and cash equivalents. A higher cash ratio indicates a more liquid position for the company.
Looking at the trend for MGE Energy Inc's cash ratio over the last five years, we can observe a general decrease from 0.18 in 2019 to 0.07 in 2023. This downward trend suggests that the company may have lower cash reserves relative to its short-term obligations in more recent years.
A cash ratio of 0.07 in 2023 indicates that for every dollar of current liabilities, MGE Energy Inc has $0.07 in cash and cash equivalents available to cover those obligations. This level of liquidity might raise concerns about the company's ability to meet its short-term financial commitments solely from its cash holdings.
It is important to monitor the cash ratio along with other liquidity and financial health indicators to assess MGE Energy Inc's overall financial stability and operational efficiency.