NorthWestern Corporation (NWE)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | |
|---|---|---|---|
| Current ratio | 0.52 | 0.45 | 0.52 |
| Quick ratio | 0.36 | 0.21 | 0.22 |
| Cash ratio | 0.01 | 0.03 | 0.01 |
Based on the provided data, NorthWestern Corporation's liquidity ratios indicate potential concerns regarding its short-term financial health.
Firstly, the current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, shows a downward trend from 0.52 on June 30, 2024 to 0.45 on September 30, 2024, before recovering slightly to 0.52 on December 31, 2024. Generally, a current ratio below 1 suggests that the company may have difficulty meeting its short-term obligations.
Secondly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also exhibits a worrying trend. The quick ratio decreased from 0.22 on June 30, 2024 to 0.21 on September 30, 2024, before experiencing a slight improvement to 0.36 on December 31, 2024. This indicates that NorthWestern Corporation may face challenges in meeting its short-term liabilities without relying on inventory sales.
Lastly, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, remains very low and relatively stable over the three periods. With a cash ratio of 0.01 on both June 30, 2024 and December 31, 2024, and a slight increase to 0.03 on September 30, 2024, NorthWestern Corporation may have limited liquid cash available to meet its immediate obligations.
In conclusion, based on these liquidity ratios, NorthWestern Corporation may face liquidity challenges in meeting its short-term obligations, and potential investors or creditors should closely monitor the company's liquidity position.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | ||
|---|---|---|---|---|
| Cash conversion cycle | days | 97.41 | 112.18 | 105.56 |
The cash conversion cycle for NorthWestern Corporation has shown fluctuations over the course of the year. On June 30, 2024, the company's cash conversion cycle was 105.56 days, indicating the time it takes to convert its investments in inventory and other resources back into cash. By September 30, 2024, this figure increased to 112.18 days, suggesting a prolonged cycle. However, by the end of December 31, 2024, the cash conversion cycle decreased to 97.41 days, reflecting potential improvements in managing working capital and cash flows. Overall, the company should continue monitoring and optimizing its operational processes to efficiently convert investments into cash.