MGE Energy Inc (MGEE)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.52 | 1.76 | 1.40 | 1.53 | 1.08 | 1.03 | 1.21 | 1.98 | 1.69 | 1.89 | 1.31 | 1.10 | 1.10 | 1.73 | 1.99 | 1.46 | 1.41 | 1.34 | 1.65 | 1.97 |
| Quick ratio | 0.68 | 0.79 | 0.62 | 0.76 | 0.54 | 0.47 | 0.63 | 1.25 | 0.97 | 1.21 | 0.73 | 0.64 | 0.63 | 1.06 | 1.06 | 0.79 | 0.76 | 0.83 | 1.05 | 1.42 |
| Cash ratio | 0.07 | 0.09 | 0.10 | 0.10 | 0.05 | 0.05 | 0.14 | 0.27 | 0.15 | 0.57 | 0.23 | 0.22 | 0.23 | 0.46 | 0.47 | 0.16 | 0.18 | 0.40 | 0.55 | 0.73 |
The liquidity ratios of MGE Energy Inc over the past few quarters display fluctuations in the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, has shown a mixed trend. It increased from 1.08 in December 2022 to 1.76 in September 2023, indicating an improvement in short-term liquidity. However, there was a slight decline to 1.52 as of December 2023. Overall, the current ratio had peaks in September 2022 and December 2022 and troughs in March 2020 and June 2021.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. MGE Energy Inc showed a similar pattern in the quick ratio as the current ratio. There was an upward trend from 0.47 in September 2022 to 1.25 in March 2022. However, the quick ratio decreased to 0.68 in December 2023. Notably, the quick ratio was highest in March 2022 and lowest in June 2020.
3. Cash Ratio: The cash ratio, the most conservative liquidity measure, evaluates the company's ability to cover its current liabilities with its cash and cash equivalents. The cash ratio fluctuated over the period, with a general trend of improvement from 0.05 in September 2022 to 0.57 in June 2021. However, as of December 2023, the cash ratio was at a lower level of 0.07. The cash ratio reached its peak in June 2021 and its lowest point in December 2019.
In conclusion, MGE Energy Inc's liquidity ratios have shown variability over the analysis period, with some improvement in liquidity positions in certain quarters and slight declines in others. It is essential for investors and stakeholders to monitor these ratios continuously to assess the company's short-term financial health and ability to meet its obligations.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 114.60 | 321.92 | 589.02 | 553.83 | 279.06 | 307.00 | -541.61 | -34.69 | -227.74 | -123.77 | -10.21 | -279.94 | -145.86 | -131.52 | 104.87 | 29.16 | -171.48 | 1,353.40 | -72.04 | -2,220.81 |
The cash conversion cycle of MGE Energy Inc has exhibited significant fluctuations over the period under review. The company's cash conversion cycle represents the time it takes for MGE Energy to convert its investments in inventory and other resources into cash flows from sales.
In the most recent quarter, ending December 31, 2023, MGE Energy had a cash conversion cycle of 114.60 days. This means that, on average, it takes the company around 114.60 days to sell inventory and collect cash from its customers. This figure is notably lower compared to the previous quarter, where the cycle was 321.92 days. The considerable reduction in days indicates improved efficiency in managing its working capital and liquidity.
However, if we look further back, we observe that MGE Energy had experienced considerable variability in its cash conversion cycle. For instance, in June 2022, the company had a negative cash conversion cycle of -541.61 days, indicating that it was able to collect cash from customers before paying its suppliers and managing its inventory. This trend reversed in the subsequent quarters, with the cycle turning positive and reaching its peak at 1,353.40 days in September 2019. Such fluctuation could signify challenges in managing working capital effectively.
Overall, the cash conversion cycle of MGE Energy Inc has shown volatility, reflecting the company's changing approach to managing its working capital efficiency over time. It is essential for investors and stakeholders to monitor this metric closely to assess the company's ability to generate cash flows and sustain operational activities.