Essential Utilities Inc (WTRG)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 0.50 0.55 0.58 0.62 0.62 0.46 0.53 0.63 0.64 0.64 0.76 0.65 0.65 0.68 0.65 0.69 0.63 0.47 0.70 0.44
Quick ratio 0.01 0.01 0.03 0.05 0.01 2.63 0.02 0.03 0.01 0.03 0.02 0.09 0.02 0.02 2.90 2.64 2.09 0.02 0.03 0.05
Cash ratio 0.01 0.01 0.03 0.05 0.01 2.63 0.02 0.03 0.01 0.03 0.02 0.09 0.02 0.02 2.90 2.64 2.09 0.02 0.03 0.05

Essential Utilities Inc's liquidity ratios show varying levels of liquidity over the reported periods.

The current ratio fluctuated between 0.44 to 0.76, with a general upward trend observed from June 2020 to June 2022, before declining by the end of 2024. This indicates that the company may have had difficulty in meeting its short-term obligations in some periods, although it improved its liquidity position in the mid-term.

The quick ratio, which excludes inventory from current assets, ranged from 0.01 to 2.90. It shows a significant improvement in liquidity from September 2023 to June 2024. This ratio suggests that the company had a better ability to cover its short-term liabilities with its most liquid assets in these periods.

The cash ratio, which is the most conservative liquidity measure, also fluctuated between 0.01 to 2.90, reflecting the company's ability to cover its current liabilities with its cash reserves and cash equivalents. The cash ratio showed a noticeable improvement in liquidity in the same periods as the quick ratio.

Overall, Essential Utilities Inc's liquidity ratios indicate that the company experienced fluctuations in its ability to meet short-term obligations over the reported periods, with improvements in liquidity in certain periods. Management should continue to monitor and manage the company's liquidity position to ensure it can meet its financial obligations effectively.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 32.82 35.92 28.85 24.93 40.47 39.92 32.87 28.24 59.97 77.62 45.07 21.47 44.89 49.19 27.79 15.27 30.70 45.90 39.85 33.17

Essential Utilities Inc's cash conversion cycle, a key metric in working capital management, fluctuated over the analyzed period. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Looking at the data provided, the cash conversion cycle ranged from a low of 15.27 days on March 31, 2021, to a high of 77.62 days on September 30, 2022. This indicates variability in the efficiency of Essential Utilities Inc in managing its working capital and turning its resources into cash.

It is noted that as of December 31, 2024, the cash conversion cycle stood at 32.82 days, reflecting an improvement from the peak observed in September 2022. A lower cash conversion cycle is generally seen as a positive sign as it indicates that the company can quickly convert its investments into cash, potentially leading to improved liquidity and financial performance.

Overall, Essential Utilities Inc should continue to monitor and effectively manage its cash conversion cycle to ensure optimal working capital utilization and efficient operations. Monitoring and improving this metric can contribute to the company's financial health and sustainability in the long run.