Archrock Inc (AROC)

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 1.24 1.26 1.53 1.26 1.40 1.41 1.57 1.19 1.56 1.13 1.43 1.17 1.49 1.22 1.50 1.40 1.63 1.55 1.74 1.42
Quick ratio 0.73 0.78 0.87 0.71 0.82 0.81 0.86 0.64 0.94 0.67 0.87 0.69 0.85 0.73 0.87 0.81 0.94 0.84 1.06 0.90
Cash ratio 0.02 0.02 0.01 0.02 0.01 0.00 0.01 0.02 0.01 0.01 0.01 0.01 0.01 0.02 0.03 0.01 0.01 0.01 0.02 0.02

Based on the provided data, let's analyze the liquidity ratios of Archrock Inc:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets.
- Archrock Inc's current ratio fluctuated over the years but generally stayed above 1, indicating a healthy liquidity position.
- The company's current ratio ranged from a low of 1.13 on September 30, 2022, to a high of 1.74 on June 30, 2020.
- The current ratio as of December 31, 2024, was 1.24, indicating that for every dollar of current liabilities, the company had $1.24 of current assets available to cover those liabilities.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets.
- Archrock Inc's quick ratio also varied throughout the years but generally showed a similar trend to the current ratio, staying above 1 in most cases.
- The quick ratio ranged from a low of 0.64 on March 31, 2023, to a high of 1.06 on June 30, 2020.
- As of December 31, 2024, the quick ratio was 0.73, indicating that the company had $0.73 of liquid assets available to cover each dollar of current liabilities.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, measuring the company's ability to cover its current liabilities with its cash and cash equivalents.
- Archrock Inc's cash ratio remained relatively low throughout the years, indicating a limited ability to cover its short-term obligations with cash alone.
- The cash ratio fluctuated between 0.00 and 0.03, with the highest value observed on June 30, 2021.
- As of December 31, 2024, the cash ratio was 0.02, implying that for every dollar of current liabilities, the company had $0.02 in cash or cash equivalents.

In summary, Archrock Inc maintained generally healthy liquidity ratios over the years, with the current and quick ratios consistently above 1, indicating a strong ability to meet its short-term obligations. However, the company's cash ratio remained relatively low, suggesting that it relied more on non-cash current assets to cover its current liabilities.


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 61.28 61.10 65.26 61.70 64.37 78.51 72.02 58.41 80.24 60.34 66.56 63.49 81.71 74.47 71.83 75.90 67.64 72.94 73.07 63.09

The cash conversion cycle (CCC) of Archrock Inc has shown some fluctuations over the past few years. From March 31, 2020, to December 31, 2024, the CCC ranged from a low of 58.41 days to a high of 81.71 days.

Overall, the company's CCC indicates the number of days it takes for Archrock to convert its resources, such as inventory and accounts receivable, into cash inflows. A lower CCC is generally considered positive as it signifies that the company is efficient in managing its working capital. In contrast, a higher CCC could indicate inefficiencies in managing cash flow and working capital.

Archrock Inc experienced fluctuating cash conversion cycles throughout the period, with some improvement demonstrated in 2022. It is essential for the company to continuously monitor and manage its inventory levels, accounts receivable, and accounts payable to ensure a healthy cash conversion cycle. Further analysis can help identify specific areas for improvement and enhance the company's overall liquidity position.