Nextera Energy Inc (NEE)

Nextera Energy Inc's liquidity ratios indicate a concerning trend in the company's short-term financial health over the past five years.

- The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has shown fluctuations between 0.47 and 0.55. However, these ratios are consistently below 1, indicating that Nextera Energy may have difficulty meeting its current liabilities using its current assets alone.

- The quick ratio, a more conservative measure of liquidity that excludes inventory from current assets, has also exhibited a downward trend from 0.44 in 2020 to 0.06 in 2024. This suggests that the company may struggle to meet its short-term obligations without relying on the sale of inventory.

- The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has similarly declined from 0.44 in 2020 to 0.06 in 2024. This indicates that Nextera Energy's ability to cover its current liabilities solely with cash has weakened over the years.

Overall, the consistently low current, quick, and cash ratios suggest that Nextera Energy Inc may face challenges in managing its short-term financial obligations and maintaining liquidity in the coming years.

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Additional liquidity measure

Nextera Energy Inc's cash conversion cycle has shown a declining trend over the years, indicating an improvement in the efficiency of its cash management. The company's cash conversion cycle decreased from 77.71 days in December 2020 to 65.26 days in December 2022, before slightly increasing to 81.74 days by December 2024.

A lower cash conversion cycle typically suggests that the company is able to convert its inventory into sales and collect payment from customers more quickly. This could be attributed to efficient inventory management, effective accounts receivable collection practices, or timely payment to suppliers.

While the overall trend is positive due to the decreasing cycle, the slight increase in 2024 may warrant further investigation to ensure sustainable cash flow management in the future.