Peabody Energy Corp (BTU)

Peabody Energy Corp's liquidity ratios show a generally positive trend over the years, indicating an improvement in the company's short-term financial health.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has increased from 1.84 in 2020 to 2.15 in 2024. This suggests that Peabody Energy Corp has strengthened its liquidity position over the period.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. While the quick ratio fluctuated slightly over the years, it generally remained above 1, indicating the company's ability to meet its short-term liabilities with its most liquid assets.

The cash ratio, which focuses solely on cash and cash equivalents compared to current liabilities, also shows a stable performance for Peabody Energy Corp. The ratio consistently remained above 1, reflecting the company's capacity to settle its immediate obligations with its available cash reserves.

Overall, the liquidity ratios of Peabody Energy Corp demonstrate a healthy liquidity position, with sufficient short-term assets to cover its near-term liabilities and operational needs.

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Additional liquidity measure

The cash conversion cycle for Peabody Energy Corp has shown some fluctuations over the past five years. As of December 31, 2020, the company's cash conversion cycle stood at 37.82 days, indicating that it takes approximately 37.82 days for the company to convert its investments in inventory and accounts receivable into cash from sales.

Over the subsequent years, there was a decreasing trend in the cash conversion cycle, with values of 32.41 days as of December 31, 2021, 32.84 days as of December 31, 2022. This trend suggests that the company improved its efficiency in managing its working capital, reducing the time taken to convert its resources into cash.

However, there was a slight uptick in the cash conversion cycle by the end of 2023, reaching 37.93 days, and further increasing to 41.97 days by December 31, 2024. This increase may be attributed to factors such as changes in inventory management, accounts receivable collection efficiency, or payment terms.

Overall, it is essential for Peabody Energy Corp to closely monitor its cash conversion cycle and continue to seek opportunities to optimize its working capital management to ensure efficient use of its resources and maintain healthy cash flows.