Antero Midstream Partners LP (AM)

The liquidity ratios of Antero Midstream Partners LP indicate the firm's ability to meet its short-term financial obligations.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities using its current assets. Antero Midstream Partners LP's current ratio has been fluctuating over the years, from 1.00 in 2020 to 0.74 in 2021, indicating a potential liquidity strain. However, there has been some improvement with the ratio increasing to 0.95 in 2023 and 1.17 in 2024, suggesting a better ability to meet short-term obligations.

2. Quick Ratio: The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets. In 2020, the quick ratio was very high at 8.67, reflecting a strong ability to meet short-term obligations without relying on inventory. However, the quick ratio dropped significantly to 0.73 in 2021 and remained low at 0.86 in 2022, indicating potential difficulties in meeting immediate liabilities without relying on inventory.

3. Cash Ratio: The cash ratio assesses the company's ability to cover its short-term liabilities using only cash and cash equivalents. Antero Midstream Partners LP had a relatively high cash ratio of 7.69 in 2020, suggesting a strong ability to pay off short-term obligations with cash on hand. However, the cash ratio dropped to 0.00 from 2021 onwards, indicating that the company may not have sufficient cash to cover short-term obligations without relying on other current assets.

Overall, the liquidity ratios of Antero Midstream Partners LP show some variability over the years, with improvements in the current ratio in recent years but a decline in the quick ratio and a significant drop in the cash ratio. It is essential for the company to closely monitor and manage its liquidity position to ensure it can readily meet its short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle of Antero Midstream Partners LP has shown significant improvement over the years.

As of December 31, 2020, the cash conversion cycle was 33.74 days, indicating that it took approximately 33.74 days for the company to convert its investments in inventory and other resources into cash inflows.

By December 31, 2021, the cash conversion cycle had decreased to 4.66 days, suggesting a more efficient management of working capital and a quicker conversion of investments into cash.

In the following years, the trend continued to improve, with the cash conversion cycle further decreasing to 8.43 days by December 31, 2022, and reaching 0.00 days by December 31, 2023 and 2024.

A cash conversion cycle of 0.00 days signifies that the company is able to generate cash inflows almost immediately after investing in inventory and resources, reflecting strong efficiency in managing liquidity and working capital.

Overall, the improving trend in the cash conversion cycle indicates that Antero Midstream Partners LP has been successful in optimizing its working capital management and enhancing its cash flow generation capabilities in recent years.