Middlesex Water Company (MSEX)

Middlesex Water Company's liquidity ratios show fluctuations over the years. The current ratio, which measures the company's ability to cover short-term liabilities with short-term assets, has improved from 0.60 in 2020 to 1.05 in 2023, indicating a better ability to meet its obligations. However, there was a significant drop in the current ratio to 0.32 in 2022, which could be a cause for concern.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar trend. It remained relatively stable around 0.46 in 2020 and 2021 but decreased to 0.24 in 2022 before slightly improving to 0.41 in 2024. This indicates some variability in the company's ability to cover immediate liabilities with its most liquid assets.

The cash ratio, which reflects the company's ability to pay off short-term liabilities using only cash and cash equivalents, decreased from 0.08 in 2020 to 0.02 in 2023 before recovering slightly to 0.05 in 2024. This suggests a decline in the company's immediate liquidity position over the years.

Overall, Middlesex Water Company's liquidity ratios show some volatility, with fluctuations in its ability to meet short-term obligations. It is important for the company to closely monitor and manage its liquidity position to ensure it can meet its financial commitments as they come due.

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Additional liquidity measure

The cash conversion cycle of Middlesex Water Company has shown significant fluctuations over the past five years. In December 2020, the company had a negative cash conversion cycle of -170.05 days, indicating that it was able to convert its investments in inventory and accounts receivable back into cash relatively quickly. However, by December 2021, the cash conversion cycle had improved to -72.59 days, suggesting more efficient management of its working capital.

In December 2022, the cash conversion cycle increased slightly to -85.09 days, which may indicate a temporary slowdown in converting inventory and receivables into cash. The trend continued in December 2023, with the cash conversion cycle further decreasing to -4.64 days, signaling an even faster conversion of resources into cash.

However, by December 2024, there was a notable increase in the cash conversion cycle to -79.29 days, indicating a potential delay in the company's ability to convert its assets into cash. Overall, while the company has generally maintained a negative cash conversion cycle over the years, it is essential for Middlesex Water Company to effectively manage its working capital to sustain liquidity and optimize its cash conversion efficiency.