Quanta Services Inc (PWR)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.30 | 1.47 | 1.63 | 1.50 | 1.68 |
| Quick ratio | 0.12 | 0.25 | 0.13 | 0.07 | 0.09 |
| Cash ratio | 0.12 | 0.25 | 0.13 | 0.07 | 0.09 |
Quanta Services Inc's liquidity ratios show mixed performance over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 1.68 in 2020 to 1.30 in 2024. This downward trend indicates a potential weakening of Quanta's short-term liquidity position.
The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventory from current assets. Quanta's quick ratio fluctuated during the period, reaching its highest point of 0.25 in 2023. However, the ratio decreased to 0.12 in 2024, suggesting a decrease in the company's ability to meet its short-term liabilities with its most liquid assets.
The cash ratio, a more conservative measure of liquidity that only considers cash and cash equivalents in relation to current liabilities, also moved in tandem with the quick ratio. The ratio peaked at 0.25 in 2023 but then declined to 0.12 in 2024.
Overall, while Quanta Services Inc maintained ratios above 1 (indicating they have more current assets than current liabilities), the downward trend in these ratios over the years signals a potential liquidity challenge that may require careful management of short-term obligations to ensure financial stability.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 4.71 | 3.57 | 2.59 | 2.80 | 1.93 |
The cash conversion cycle of Quanta Services Inc has been fluctuating over the years. As of December 31, 2020, the cash conversion cycle was relatively short, standing at 1.93 days. However, by December 31, 2024, the cash conversion cycle had extended to 4.71 days, indicating a longer duration for the company to convert its investments in inventory and other resources back into cash.
This trend suggests that Quanta Services Inc may be taking longer to convert its investments into cash, which could potentially impact its liquidity and working capital management. It is important for the company to closely monitor its cash conversion cycle to ensure efficient utilization of its resources and maintain healthy cash flows.