NRG Energy Inc. (NRG)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.02 | 1.06 | 1.02 | 0.99 | 1.25 | 1.32 | 1.29 | 1.38 | 1.37 | 1.21 | 1.24 | 1.13 | 3.15 | 1.55 | 1.43 | 1.22 | 1.31 | 1.24 | 1.33 | 1.78 |
| Quick ratio | 0.43 | 0.47 | 0.38 | 0.38 | 0.40 | 0.31 | 0.27 | 0.30 | 0.44 | 0.29 | 0.46 | 0.61 | 2.51 | 1.11 | 0.66 | 0.59 | 0.58 | 0.63 | 0.59 | 0.90 |
| Cash ratio | 0.06 | 0.05 | 0.04 | 0.04 | 0.03 | 0.02 | 0.04 | 0.03 | 0.03 | 0.04 | 0.05 | 0.09 | 2.04 | 0.54 | 0.19 | 0.27 | 0.15 | 0.09 | 0.13 | 0.44 |
The liquidity ratios for NRG Energy Inc. over the past eight quarters show trends that are worth analyzing.
The current ratio, which measures the company’s ability to meet short-term obligations with its current assets, has been fluctuating around 1 over the past two years. This indicates that NRG Energy Inc. has just enough current assets to cover its short-term liabilities. Although the ratio dipped below 1 in Q1 2023, it has generally stayed relatively stable.
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, follows a similar trend to the current ratio. Like the current ratio, the quick ratio has been hovering around 1 for the past eight quarters. This means that while the company may be able to cover its short-term obligations, it is highly reliant on liquid assets such as cash and receivables.
In terms of the cash ratio, which is the strictest measure of liquidity as it compares cash and cash equivalents to current liabilities, NRG Energy Inc. has seen a gradual decline in its ability to cover short-term obligations with cash alone. The ratio has decreased from above 1 in the first two quarters of 2022 to below 1 by Q4 2022. This trend continued into 2023, with the cash ratio remaining below 1 in all quarters.
Overall, NRG Energy Inc.'s liquidity ratios suggest that the company has been managing its short-term obligations adequately, but there might be a need for closer monitoring, especially in terms of its cash position. The downward trend in the cash ratio warrants attention, as it indicates a potential strain on the company’s ability to meet immediate payment needs with available cash resources.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 23.61 | 27.71 | 23.28 | 23.34 | 19.37 | 20.69 | 12.97 | 11.28 | 14.21 | 15.47 | 7.89 | 15.05 | 18.32 | 20.91 | 20.25 | 17.27 | 21.15 | 26.93 | 22.38 | 19.07 |
The cash conversion cycle of NRG Energy Inc. has shown some fluctuations over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 21.44 days, which decreased compared to the previous quarter Q3 2023 at 26.16 days. This indicates that NRG Energy Inc. was able to convert its investments in inventory and accounts receivable into cash more efficiently in Q4 2023 than in the previous quarter.
Looking further back, in Q2 and Q1 2023, the cash conversion cycle was 22.16 days and 22.18 days respectively, showing a relatively stable performance in terms of cash conversion efficiency. Comparing these figures to the same quarters in 2022, there has been a general trend of longer cash conversion cycles in 2023 compared to 2022.
Notably, the cash conversion cycle was particularly short in Q2 and Q1 2022 at 9.49 days and 8.41 days respectively, indicating a more efficient cash conversion process during that period. However, this trend was not sustained in the following quarters of 2022 and 2023, where the cash conversion cycle increased.
Overall, the analysis of NRG Energy Inc.'s cash conversion cycle suggests that the company has experienced fluctuations in its efficiency in converting investments into cash over the past eight quarters, with some quarters showing improved performance while others demonstrating a less efficient cash conversion process.