Sempra Energy (SRE)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 0.55 0.54 0.60 0.44 0.66
Quick ratio 2.78 0.24 -1.18 0.27 2.21
Cash ratio 2.56 0.02 -1.46 0.06 1.96

Based on the provided data, Sempra Energy's liquidity ratios have shown some fluctuations over the years.

1. Current Ratio:
Sempra Energy's current ratio has declined from 0.66 in 2020 to 0.55 in 2024. While the ratio remains below 1 in each year, indicating that the company may have difficulties meeting its short-term obligations with its current assets alone, there has been a slight improvement from 2021 to 2022 followed by a decline in 2023 before a slight increase in 2024.

2. Quick Ratio:
The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, shows significant variability in Sempra Energy's ability to cover its current liabilities. The ratio was particularly low in 2022 at -1.18, suggesting potential concerns about short-term liquidity. However, it improved notably in 2024 to 2.78, reflecting the company's ability to pay off its current liabilities without relying on inventory.

3. Cash Ratio:
The cash ratio, which assesses the company's ability to cover its current liabilities with cash and cash equivalents, also exhibits fluctuations. Sempra Energy had a cash ratio of 1.96 in 2020, signaling a healthy liquidity position. However, the ratio dropped to 0.02 in 2023, indicating potential challenges in meeting short-term obligations with cash reserves. The ratio recovered to 2.56 in 2024, showing an improvement in liquidity strength.

Overall, while Sempra Energy's liquidity ratios have varied over the years, the company should aim to maintain a balance between its current assets and liabilities to ensure it can meet its short-term financial obligations efficiently. Investors and analysts may continue to monitor these liquidity ratios to assess the company's liquidity position and financial health.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days -147.06 -178.57 -167.65 -140.01 -128.72

The cash conversion cycle of Sempra Energy has been displaying an interesting trend over the five-year period from 2020 to 2024. The company's cash conversion cycle, a measure of how long it takes for the company to convert its investments in inventory and accounts receivable into cash receipts from customers, has shown a general improvement over the period.

In 2020, the cash conversion cycle stood at -128.72 days, indicating that Sempra Energy was able to convert its investments into cash relatively quickly, potentially reflecting efficient inventory management and collection of receivables.

By the end of 2021, the cash conversion cycle improved further to -140.01 days, suggesting that the company continued to optimize its working capital management processes.

However, in 2022, there was a notable increase in the cash conversion cycle to -167.65 days, which could indicate a temporary slowdown in the company's ability to efficiently manage its working capital.

The trend reversed in 2023, as the cash conversion cycle decreased to -178.57 days, showing a recovery in the efficiency of Sempra Energy's cash conversion processes.

By the end of 2024, the cash conversion cycle improved once again to -147.06 days, indicating that the company was able to efficiently convert its investments into cash receipts over the year.

Overall, Sempra Energy's negative cash conversion cycle values over the period suggest that the company has been successful in managing its working capital effectively, allowing it to generate cash quickly from its operational activities.