Public Service Enterprise Group Inc (PEG)

The liquidity ratios of Public Service Enterprise Group Inc. have shown variability over the past five years.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has fluctuated between 0.64 and 0.88 from 2019 to 2023. A current ratio below 1 indicates that the company may have difficulty meeting its short-term obligations. PSEG's current ratio has generally been below 1, suggesting potential liquidity challenges.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. PSEG's quick ratio has ranged from 0.46 to 0.50 over the same period. This ratio suggests that the company may have difficulty meeting its short-term obligations using only its most liquid assets.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has fluctuated between 0.12 and 0.19 for PSEG from 2019 to 2023. A cash ratio below 1 indicates that the company may struggle to cover its short-term liabilities with its cash holdings alone.

Overall, the liquidity ratios of Public Service Enterprise Group Inc. indicate a potential need for the company to improve its liquidity position to better meet its short-term obligations. It may be prudent for PSEG to assess its working capital management and ensure that it has sufficient liquid assets to sustain its operations effectively.

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Additional liquidity measure

The cash conversion cycle for Public Service Enterprise Group Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 35.00 days compared to 59.09 days in 2022. This indicates that the company took less time to convert its investments in inventory and other resources into cash during the most recent year.

However, the trend over the five years shows that the cash conversion cycle has generally been increasing since 2019 when it was at its lowest point of 7.08 days. This suggests that the company may be facing challenges in managing its working capital efficiency. A longer cash conversion cycle could indicate potential issues with inventory management, sales on credit terms, or collection of receivables.

In 2021, there was a significant improvement in the cash conversion cycle, dropping to 18.71 days from 10.47 days in 2020. This improvement may have been due to better inventory management, faster collection of receivables, or more efficient payment of payables during that period.

Overall, the analysis of Public Service Enterprise Group Inc.'s cash conversion cycle highlights the company's ability to efficiently manage its working capital in converting investments into cash but also suggests a need for ongoing monitoring and potential improvements in working capital management practices.