Vistra Energy Corp (VST)

The current ratio of Vistra Energy Corp has fluctuated over the past few years, indicating varying levels of liquidity. The current ratio measures the firm's ability to cover its short-term obligations with its current assets. From March 31, 2020, to June 30, 2024, the current ratio ranged from a low of 0.68 to a high of 1.35, with an average of around 1.05. A current ratio above 1 suggests that the company has more current assets than current liabilities, which is generally considered favorable.

On the other hand, the quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows fluctuation in Vistra Energy Corp's liquidity position. From March 31, 2020, to December 31, 2024, the quick ratio ranged from a low of 0.05 to a high of 0.39, with an average of around 0.19. A quick ratio below 1 indicates potential difficulty in meeting short-term obligations without relying on selling inventory.

Lastly, the cash ratio, which is the most conservative measure of liquidity as it only includes cash and cash equivalents, has also shown variability for Vistra Energy Corp. From March 31, 2020, to December 31, 2024, the cash ratio ranged from a low of 0.05 to a high of 0.39, with an average of around 0.17. A cash ratio below 1 indicates that the company may not have enough cash to cover its short-term liabilities immediately.

Overall, while the current ratio suggests that Vistra Energy Corp has generally been able to meet its short-term obligations with its current assets, the quick ratio and cash ratio reveal a more conservative picture of the company's liquidity position, showing potential vulnerabilities in meeting short-term obligations without reliance on inventory or cash equivalents.

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Additional liquidity measure

The cash conversion cycle of Vistra Energy Corp has shown fluctuations over the periods analyzed. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle generally indicates better management of working capital and improved liquidity.

From March 2020 to June 2021, Vistra Energy Corp managed to reduce its cash conversion cycle from around 26 to 16 days, reflecting increased efficiency in converting its resources into cash. This improvement could be attributed to better inventory management and quicker collection of receivables.

However, from December 2021 to March 2024, the cash conversion cycle gradually increased, reaching a peak of 40.11 days by March 2024. This elongation could indicate that the company took longer to convert its investments into cash during these periods. Factors like higher inventory levels, delayed payments from customers, or decreased sales efficiency could have contributed to this trend.

Overall, Vistra Energy Corp needs to focus on optimizing its cash conversion cycle to enhance its working capital management and ensure a healthy cash flow position. Regular monitoring and adjustments in inventory levels, credit policies, and operational efficiency can help the company maintain a more favorable cash conversion cycle in the future.