Northwest Natural Gas Co (NWN)

The current ratio of Northwest Natural Gas Co has shown an improving trend over the years, increasing from 0.52 in 2020 to 0.86 in 2023 before declining sharply to 0.15 in 2024. This ratio indicates that the company may have had difficulty meeting its short-term obligations in 2020 and 2021, but showed improvement in liquidity in 2022 and 2023 before facing a significant liquidity challenge again in 2024.

The quick ratio, which measures the company's ability to meet its short-term obligations with its most liquid assets, has been fluctuating substantially. It was quite low in 2020 and 2021, at 0.07 and 0.09 respectively, indicating potential difficulty in covering immediate liabilities. The ratio improved significantly in 2022 to 0.25, suggesting a better ability to meet short-term obligations. However, the quick ratio became negative in 2023, indicating potential issues with the company's short-term liquidity, before surging to an extremely high value of 27.65 in 2024, which might be an anomaly or signify a substantial change in the company's financial position.

The cash ratio, which is a more stringent measure of liquidity as it only considers cash and cash equivalents, follows a similar trend to the quick ratio. It was low in 2020 and 2021 at 0.07 and 0.09 respectively, improved significantly to 0.25 in 2022, and then dropped to a negative value in 2023. The cash ratio then surged to an exceptionally high value of 27.65 in 2024, which appears to be an outlier compared to the previous years.

Overall, the liquidity ratios of Northwest Natural Gas Co have exhibited volatility and significant fluctuations over the years, raising questions about the company's ability to effectively manage its short-term financial obligations and maintain a stable liquidity position. It would be important for stakeholders to further investigate the reasons behind these fluctuations and assess the company's overall financial health and sustainability.

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Additional liquidity measure

The cash conversion cycle of Northwest Natural Gas Co has shown a gradual increase over the past five years. Starting at 32.93 days on December 31, 2020, it has risen to 39.34 days by December 31, 2021, 45.67 days by December 31, 2022, 53.11 days by December 31, 2023, and then decreased slightly to 51.68 days by December 31, 2024.

The cash conversion cycle measures the time it takes for a company to convert its investments in raw materials into cash inflows from sales. A longer cash conversion cycle indicates that the company is taking more time to generate cash from its operations, which could impact liquidity and working capital management.

Northwest Natural Gas Co's increasing cash conversion cycle suggests a potentially slower conversion of inventory into sales and accounts receivable into cash over the years. It is important for the company to closely monitor its working capital efficiency and manage its inventories and receivables effectively to prevent any adverse impact on cash flow and overall financial health.