MYR Group Inc (MYRG)

MYR Group Inc's liquidity ratios show varying levels of liquidity over the past five years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. MYR Group Inc's current ratio has been fluctuating between 1.33 and 1.50 over the past five years, indicating that the company has generally been able to meet its short-term liabilities with its current assets. A current ratio above 1 suggests that the company has more current assets than current liabilities.

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. MYR Group Inc's quick ratio has been low, ranging from 0.00 to 0.16, suggesting that the company may have difficulty meeting its short-term obligations without relying on inventory. A quick ratio below 1 indicates that the company may struggle to meet its immediate liabilities.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, as it measures the company's ability to cover its short-term liabilities with its cash and cash equivalents only. MYR Group Inc's cash ratio has also been low, fluctuating between 0.00 and 0.16, indicating that the company holds minimal cash reserves relative to its short-term obligations. A cash ratio close to 0 suggests that the company may have limited ability to pay off its current liabilities using only cash.

Overall, MYR Group Inc's liquidity ratios demonstrate a need for the company to closely monitor its liquidity position and potentially improve its ability to meet short-term obligations, especially considering the low quick and cash ratios observed in the recent years.

---

Additional liquidity measure

Based on the provided data, MYR Group Inc's cash conversion cycle has shown mixed performance over the past few years. In 2020 and 2022, the company achieved a cash conversion cycle of 0.00 days, indicating that it efficiently converted its investments in inventory and accounts receivable into cash.

However, in 2021, there was a notable increase in the cash conversion cycle to 7.50 days, suggesting a delay in converting its investments into cash during that period. This increase could be attributed to factors such as extended payment terms with customers, inventory management challenges, or slower collection of accounts receivable.

Subsequently, MYR Group Inc managed to improve its cash conversion cycle back to 0.00 days in 2023 and 2024, indicating a return to efficient cash management practices and a faster conversion of working capital investments into cash.

Overall, while the company experienced a temporary setback in 2021, it was able to rectify the situation and maintain a healthy cash conversion cycle in the following years, which is essential for sustainable liquidity and operational efficiency. It is recommended for MYR Group Inc to continuously monitor and optimize its cash conversion cycle to ensure effective working capital management.