Southern Company (SO)

Liquidity ratios

	Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Current ratio	0.77	0.84	0.83	0.69	0.66	0.81	0.85	0.89	0.82	0.86	0.82	0.82	0.71	0.90	0.97	0.99	0.78	0.94	0.76	0.88
Quick ratio	0.24	0.33	0.29	0.21	0.65	0.82	0.89	0.95	0.32	0.45	0.38	0.41	0.34	0.43	0.36	0.53	0.28	0.45	0.27	0.31
Cash ratio	0.06	0.13	0.16	0.08	0.51	0.65	0.70	0.77	0.16	0.30	0.25	0.27	0.20	0.29	0.20	0.37	0.16	0.28	0.13	0.14

The liquidity ratios of Southern Company provide insights into its ability to meet short-term obligations and its overall financial health.

- The current ratio has shown some fluctuations over the quarters, ranging from 0.66 to 0.84, with the latest ratio at 0.77. This suggests that the company may have difficulty in covering its current liabilities with its current assets.

- The quick ratio, which excludes inventory from current assets, has also fluctuated between 0.49 and 0.69. The latest ratio of 0.53 indicates that the company may have limited ability to meet its short-term liabilities without relying on inventory.

- The cash ratio has shown a similar pattern of fluctuations, ranging from 0.26 to 0.40. The latest ratio of 0.28 suggests that Southern Company has a relatively low level of cash to cover its current liabilities.

Overall, the liquidity ratios of Southern Company indicate a potential liquidity challenge, as the ratios are below the ideal benchmark of 1.0 for current ratio, 0.5 for quick ratio, and 0.2 for cash ratio. Investors and creditors may view these ratios as a red flag for the company's short-term financial stability and ability to meet its obligations. It would be advisable for Southern Company to closely monitor and improve its liquidity position in order to enhance its financial health and mitigate liquidity risks.

Additional liquidity measure

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cash conversion cycle	days	123.49	99.09	162.24	135.66	-227.52	-65.13	-119.65	-2.13	57.14	35.19	36.94	59.21	74.85	127.53	129.29	128.86	89.86	118.91	62.43	37.73

The cash conversion cycle of Southern Company has fluctuated over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 69.46 days, which was higher compared to the previous quarter (Q3 2023) at 53.74 days. This indicates that Southern Company took longer to convert its investments in inventory into cash during Q4 2023.

Looking further back, Q4 2023's cash conversion cycle was significantly higher than the Q4 2022 figure of 20.16 days, indicating a deteriorating trend in their cash conversion efficiency over the last year.

The highest cash conversion cycle during the period analyzed was in Q1 2023 at 48.64 days, while the lowest was in Q4 2022 at 20.16 days. Generally, a longer cash conversion cycle may indicate inefficiencies in the company's management of working capital, potentially leading to increased financing costs or lower liquidity.

Southern Company should closely monitor its cash conversion cycle and consider implementing strategies to improve efficiency in converting inventory into cash to optimize its working capital management and overall financial performance.