NewJersey Resources Corporation (NJR)

The liquidity ratios of NewJersey Resources Corporation over the past five years show some concerning trends. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been on a declining trend, falling from 1.17 in 2020 to 0.62 in 2024. This indicates a decrease in the company's ability to pay off its short-term obligations using its current assets.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has remained consistently low over the years, hovering around 0.13 to 0.20. This suggests that the company may have difficulties meeting its obligations using its most liquid assets.

The cash ratio, which measures the company's ability to cover its current liabilities with only its cash and cash equivalents, has remained at 0.00 for all the years analyzed. This indicates that the company does not hold enough cash to cover its short-term liabilities without relying on other current assets.

Overall, these liquidity ratios suggest that NewJersey Resources Corporation may be facing some challenges in meeting its short-term obligations with its current asset base. It is important for the company to closely monitor its liquidity position and take steps to improve it in order to ensure financial stability and meet its obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle of NewJersey Resources Corporation has shown fluctuations over the past five years. In 2024, the company's cash conversion cycle decreased to 1,390.34 days from 1,616.99 days in 2023, indicating an improvement in the efficiency of managing cash flows.

However, in 2022, the cash conversion cycle spiked significantly to 2,999.77 days, which suggests that the company took much longer to convert its investments in inventory and accounts receivable into cash during that period. This prolonged cycle may have impacted the company's liquidity and working capital management.

In 2021, there was a notable improvement as the cash conversion cycle turned negative to -15.29 days, indicating that the company was able to quickly convert its investments into cash. This rapid conversion could be attributed to efficient inventory management and effective accounts payable practices.

In 2020, the cash conversion cycle reverted to a positive figure of 1,477.81 days, indicating a longer cycle compared to the previous year. This suggests that the company took more time to convert its investments into cash in 2020 compared to 2021.

Overall, the trend in the cash conversion cycle of NewJersey Resources Corporation reflects fluctuations in the efficiency of the company's cash management and working capital practices over the years. It is essential for the company to closely monitor and optimize its cash conversion cycle to ensure healthy liquidity and operational efficiency.