Middlesex Water Company (MSEX)

The liquidity ratios for Middlesex Water Co. show mixed performance over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has improved from 0.45 in 2019 to 1.05 in 2023. This indicates that the company's current assets are now more than sufficient to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Middlesex Water Co.'s quick ratio has also shown improvement over the years, increasing from 0.36 in 2019 to 0.98 in 2023. This suggests that the company has become better equipped to meet its short-term obligations without relying on inventory.

The cash ratio, which indicates the company's ability to pay off its current liabilities using only its cash and cash equivalents, has shown significant improvement from 0.07 in 2019 to 0.71 in 2023. This indicates that Middlesex Water Co. has significantly strengthened its cash position relative to its short-term obligations.

Overall, the increasing trend in all three liquidity ratios reflects a positive liquidity position for Middlesex Water Co., which may enhance its ability to meet its financial obligations in the short term.

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Additional liquidity measure

The cash conversion cycle for Middlesex Water Co. has fluctuated over the past five years, ranging from 51.77 days at the end of 2019 to a peak of 60.30 days at the end of 2023. The cycle represents the time it takes for the company to convert its investments in inventory into cash received from customers.

A longer cash conversion cycle may indicate inefficiencies in the company's operations, such as slow inventory turnover or extended accounts receivable collection periods. On the other hand, a shorter cycle implies that the company is able to more quickly convert its resources into cash.

Middlesex Water Co.'s trend of increasing cash conversion cycle over the years may raise concerns about its working capital management and liquidity. Further analysis and investigation into the company's inventory management, accounts receivable collection practices, and payment terms with suppliers may be necessary to address any underlying issues affecting its cash conversion cycle.