Sunrun Inc (RUN)

Sunrun Inc's current ratio has fluctuated over the period under review, ranging from a low of 1.08 in September 2020 to a high of 1.82 in December 2022. Generally, the current ratio has been above 1, indicating that the company has had more current assets than current liabilities to meet its short-term obligations.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also shown variability. It ranged from 0.46 in September 2020 to 1.08 in June 2024. The quick ratio has been below 1 for several periods, suggesting that Sunrun Inc may have had difficulty meeting its short-term obligations without relying on inventory.

The cash ratio, which represents the most stringent test of liquidity as it considers only cash and cash equivalents, mirrors the pattern seen in the quick ratio. The ratio has fluctuated, with a low of 0.46 in September 2020 and a high of 1.08 in June 2024. Sunrun Inc's ability to cover its current liabilities with cash on hand has varied, showing potential challenges in liquidity management.

Overall, while the current ratio indicates that Sunrun Inc has generally maintained a healthy level of liquidity over the period, the quick and cash ratios suggest that the company may have faced some liquidity challenges at certain points. Management should continue to monitor these ratios to ensure the company's ability to meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Sunrun Inc has exhibited fluctuations over the past few years. The cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to June 30, 2020, there was a significant improvement in the cash conversion cycle, dropping from 140.68 days to 116.66 days. This suggests that Sunrun Inc was able to convert its investments into cash more efficiently during this period.

Subsequently, there was a further decrease in the cycle time to 99.59 days by September 30, 2020, indicating continued improvement. However, the cycle increased to 138.95 days by December 31, 2020, before declining to 121.85 days by March 31, 2021.

Throughout 2021 and 2022, the cash conversion cycle fluctuated within a range, showing some inconsistency in the company's ability to efficiently convert investments into cash. However, towards the end of 2022 and into 2023, there was a notable improvement as the cycle decreased to 80.03 days by December 31, 2023.

By March 31, 2024, the cash conversion cycle further improved to 75.85 days and continued to decline to 68.14 days by June 30, 2024. This trend indicates that Sunrun Inc has been effectively managing its working capital and operational efficiency, resulting in a shorter time span for converting investments into cash.

Overall, the downward trend in the cash conversion cycle from 2020 to 2024 reflects the company's efforts to enhance its cash flow management and operational performance. This improvement is a positive indication of Sunrun Inc's ability to efficiently manage its working capital and generate cash from its business operations.