Southern Company (SO)

Liquidity ratios

	Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Current ratio	0.67	0.91	0.91	0.92	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
Quick ratio	0.07	0.30	0.10	0.07	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
Cash ratio	0.07	0.30	0.10	0.07	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

The current ratio of Southern Company, a measure of its short-term liquidity, has observed fluctuations over the periods analyzed. It ranged from a low of 0.66 as of December 31, 2022, to a high of 0.99 as of March 31, 2020. The general trend indicates a decrease in the current ratio over the most recent periods, dropping to 0.67 by December 31, 2024.

On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventories from current assets, also displayed variability. It dipped to a low of 0.06 by December 31, 2023, before recovering to 0.30 as of September 30, 2024. This ratio was notably volatile compared to the current ratio.

The cash ratio, representing the most conservative liquidity measure by considering only cash and cash equivalents, mirrored the trends seen in the quick ratio. It followed a similar pattern of decline and recovery, albeit with more pronounced fluctuations, reflecting Southern Company's cash position and ability to cover immediate obligations.

In conclusion, Southern Company's liquidity ratios exhibit fluctuating patterns over the analyzed periods, with the current ratio showing a decreasing trend and the quick and cash ratios displaying more volatility. These ratios provide insights into the company's ability to meet short-term obligations and manage its liquidity risk.

Additional liquidity measure

		Dec 31, 2024	Sep 30, 2024	Jun 30, 2024	Mar 31, 2024	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
Cash conversion cycle	days	78.14	79.13	77.31	83.08	90.32	75.71	63.80	55.17	52.93	56.80	54.08	54.89	65.85	67.92	67.01	73.08	86.67	85.16	80.24	71.58

The cash conversion cycle of Southern Company has displayed fluctuations over the period under review. The cycle measures the time it takes for the company to convert its resources invested in inventory and receivables into cash inflows from sales.

From March 31, 2020, to September 30, 2022, there was a decreasing trend in the cash conversion cycle, indicating the company was managing its inventory and receivables efficiently. However, there was a slight increase in the cycle for the next three quarters, signaling a potential slowdown in cash conversion efficiency.

The company managed to reduce the cash conversion cycle to its lowest point at 52.93 days by December 31, 2022. This suggests that Southern Company was able to collect cash from its sales and manage its working capital more effectively during that period.

Subsequently, there was an uptrend in the cash conversion cycle, reaching 90.32 days by December 31, 2023. This prolonged cycle may indicate issues with inventory management, delayed receivables collection, or other challenges in converting resources into cash efficiently.

In the following quarters of March 31, 2024, and June 30, 2024, the cash conversion cycle slightly decreased but remained relatively high compared to the earlier periods, indicating ongoing challenges in optimizing cash conversion processes.

Overall, Southern Company needs to focus on improving its inventory management and receivables collection processes to enhance its cash conversion efficiency and ensure a healthy working capital cycle.