Essential Utilities Inc (WTRG)

Essential Utilities Inc's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has been consistently low over the years, ranging from 0.27 to 0.65. This may suggest that the company may face challenges in meeting its short-term obligations.

Furthermore, the quick ratio, which provides a stricter measure by excluding inventory from current assets, also shows a concerning trend, ranging from 0.01 to 2.09. A low quick ratio indicates that Essential Utilities Inc may have difficulty meeting its immediate obligations without relying on inventory.

Lastly, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also been consistently low at 0.01. This suggests that the company has minimal cash reserves relative to its short-term liabilities.

Overall, based on the liquidity ratios provided, Essential Utilities Inc appears to have liquidity challenges, as indicated by the low current ratio, quick ratio, and cash ratio over the years. It may need to consider strategies to improve its liquidity position to ensure it can meet its short-term financial obligations effectively.

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Additional liquidity measure

Essential Utilities Inc's cash conversion cycle has shown fluctuations over the past five years. Starting at 30.70 days in December 2020, the cycle increased to 44.89 days by December 2021. Subsequently, it further extended to 59.97 days by December 2022, reflecting a significant lag in the conversion of resources into cash.

However, there was a notable improvement in efficiency by December 2023, as the cash conversion cycle decreased to 44.32 days. This suggests a positive trend towards optimizing the company's working capital management. In the latest reported period as of December 31, 2024, the cycle further decreased to 39.67 days, indicating a continued effort to streamline operational processes and enhance cash flow.

Overall, while there have been fluctuations in Essential Utilities Inc's cash conversion cycle, the recent trend towards reducing the cycle duration is a favorable indication of improved liquidity management and operational efficiency within the company.