WEC Energy Group Inc (WEC)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.55 | 0.69 | 0.71 | 0.50 | 0.66 |
| Quick ratio | 0.30 | 0.81 | 0.88 | 0.72 | 0.38 |
| Cash ratio | 0.01 | 0.42 | 0.48 | 0.43 | 0.01 |
WEC Energy Group Inc's liquidity ratios, specifically the current ratio, quick ratio, and cash ratio, have fluctuated over the past five years. The current ratio, which indicates the company's ability to cover its short-term liabilities with its current assets, has shown inconsistency, ranging from a low of 0.50 in 2020 to a high of 0.71 in 2021. A current ratio below 1 suggests that the company may have difficulty meeting its short-term obligations.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also varied, with a low of 0.37 in 2020 and a high of 0.54 in 2021. A quick ratio below 1 indicates that the company may struggle to meet its immediate liabilities without relying on selling inventory.
The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has shown a similar pattern of fluctuation. The cash ratio has ranged from 0.08 in 2020 to 0.14 in 2021, demonstrating the company's ability to cover a relatively lower proportion of its current liabilities with cash alone.
Overall, the liquidity ratios of WEC Energy Group Inc suggest that the company has experienced liquidity challenges in recent years, with a trend of lower ratios indicating potential difficulties in meeting short-term obligations. It is important for the company to closely monitor and manage its liquidity position to ensure financial stability and resilience in the face of uncertain economic conditions.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 82.11 | 58.93 | 51.31 | 41.44 | 41.58 |
The cash conversion cycle for WEC Energy Group Inc has shown varying trends over the past five years. In 2023, the cash conversion cycle increased to 47.81 days from 36.41 days in 2022, indicating a longer time taken to convert its investments in inventory and receivables back into cash. This increase may be attributed to changes in operating efficiency or in the company's management of working capital.
Comparing the most recent data to 2019, we observe a significant increase in the cash conversion cycle, from 8.26 days to 47.81 days. This suggests a notable lengthening of the time it takes for the company to generate cash from its operating activities.
On the positive side, there was a substantial improvement from 2020 to 2021 with the cash conversion cycle decreasing from 5.22 days to 25.31 days. This improvement indicates that the company was able to more efficiently manage its working capital during this period.
Overall, the cash conversion cycle provides insights into WEC Energy Group Inc's ability to efficiently manage its working capital and convert its investments into cash. Monitoring changes in this metric can help identify trends in the company's operational efficiency and financial health over time.