WEC Energy Group Inc (WEC)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.60 | 0.55 | 0.69 | 0.71 | 0.50 |
| Quick ratio | 0.00 | 0.01 | 0.42 | 0.48 | 0.43 |
| Cash ratio | 0.00 | 0.01 | 0.42 | 0.48 | 0.43 |
Based on the provided data, WEC Energy Group Inc's liquidity ratios show a concerning trend over the years.
1. Current Ratio: The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been fluctuating between 0.50 and 0.71 from 2020 to 2024. A current ratio below 1 indicates that the company may have difficulty meeting its short-term liabilities with its current assets.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. The quick ratio for WEC Energy Group Inc has been declining from 0.43 in 2020 to 0.00 in 2024. A quick ratio below 1 suggests a potential liquidity issue, especially in the ability to meet immediate short-term obligations without relying on inventory.
3. Cash Ratio: The cash ratio, which is the most conservative liquidity ratio, reflects the company's ability to cover its current liabilities with cash and cash equivalents. WEC Energy Group Inc's cash ratio has also decreased from 0.43 in 2020 to 0.00 in 2024. This indicates a significant decrease in the company's ability to cover its current obligations solely with cash on hand.
In conclusion, the declining trend in the liquidity ratios of WEC Energy Group Inc raises concerns about the company's short-term financial health and ability to meet its immediate payment obligations. It would be advisable for the company to closely monitor its liquidity position and take appropriate measures to improve its liquidity in the future.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 61.66 | 53.47 | 46.78 | 43.65 | 44.34 |
The cash conversion cycle of WEC Energy Group Inc has been relatively stable over the past five years. Starting at 44.34 days on December 31, 2020, the cycle decreased slightly to 43.65 days on December 31, 2021 before showing an upward trend in the following years. By December 31, 2024, the cycle had extended to 61.66 days, indicating a longer period to convert resources into cash.
Overall, the company's cash conversion cycle has fluctuated within a moderate range over the years, suggesting that efficiency in managing cash flows may have varied. The trend towards a longer cycle in recent years may warrant further analysis to understand the underlying factors driving this change and evaluate its potential impact on the company's liquidity and working capital management.