NewJersey Resources Corporation (NJR)

The liquidity ratios of New Jersey Resources Corporation indicate its ability to meet short-term obligations and financial flexibility over the years.

The current ratio, which measures the company's ability to pay its short-term liabilities with short-term assets, has shown a declining trend from 1.17 in 2020 to 0.66 in 2023. This may suggest a decrease in the company's short-term liquidity.

The quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, also exhibits a downward trend from 0.81 in 2020 to 0.38 in 2023. This indicates a potential decrease in the company's ability to meet short-term obligations using its most liquid assets.

Furthermore, the cash ratio, which indicates the proportion of a company's assets that are in cash or cash equivalents, also displays a declining trend from 0.56 in 2020 to 0.25 in 2023. This suggests a decrease in the company's ability to cover its short-term liabilities using only its cash and cash equivalents.

Overall, the declining trend in these liquidity ratios may indicate a potential decrease in the company's ability to meet its short-term obligations and may warrant further investigation into the company's cash management and working capital practices.

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Additional liquidity measure

The cash conversion cycle of New Jersey Resources Corporation has shown fluctuations over the past five years. The cycle increased from 52.69 days in 2019 to 91.47 days in 2021, before declining to 82.48 days in 2022 and then increasing again to 104.72 days in 2023. This indicates that the company took longer to convert its investments in inventory and other resources into cash in 2023 compared to previous years. A longer cash conversion cycle could imply inefficiency in managing the company's working capital, potentially impacting its cash flow and overall financial performance.