Peabody Energy Corp (BTU)

Peabody Energy Corp's liquidity ratios provide insights into the company's ability to meet its short-term obligations.

The current ratio increased steadily from March 2020 to December 2024, indicating an improving ability to cover current liabilities with current assets. The current ratio ranged from 1.61 to 2.58 during this period, surpassing the ideal benchmark of 1. This suggests Peabody Energy had sufficient current assets to meet its short-term obligations throughout the analyzed period, with a peak at the end of December 2022.

The quick ratio, which excludes inventory from current assets, also showed a generally positive trend from March 2020 to December 2024. While it fluctuated at times, the quick ratio generally remained above 1, indicating the company's ability to meet short-term obligations without relying heavily on inventory. Notably, there were instances where the quick ratio dipped below 1, such as in September 2020 and December 2023, but it recovered in subsequent periods.

The cash ratio mirrored the trend of the quick ratio, remaining above 1 for most periods. This indicates that Peabody Energy had a sufficient level of cash and cash equivalents to cover its current liabilities without relying on inventory. However, the cash ratio also experienced fluctuations, particularly in December 2023 when it dropped below 1, suggesting a temporary strain on the company's cash position.

In conclusion, Peabody Energy Corp demonstrated overall strong liquidity positions throughout the analyzed period, as reflected in its current, quick, and cash ratios. The upward trends in these ratios showcase the company's ability to manage short-term obligations effectively and maintain a healthy liquidity position.

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Additional liquidity measure

The cash conversion cycle of Peabody Energy Corp has shown fluctuations over the periods analyzed.

From March 31, 2020, to December 31, 2021, there was a general trend of increasing days in the cash conversion cycle, indicating that the company was taking longer to convert its investments in inventory into cash. This could suggest potential inefficiencies in managing inventory levels or collecting accounts receivable.

However, from March 31, 2022, to December 31, 2024, there was a slight improvement in the cash conversion cycle. The cycle decreased from 36.79 days on March 31, 2022, to 38.79 days on December 31, 2024. This improvement might indicate better management of working capital and more efficient operations in converting inventory and receivables into cash.

Overall, the cash conversion cycle for Peabody Energy Corp ranged from a low of 29.17 days on March 31, 2020, to a high of 43.79 days on September 30, 2024. The company should continue monitoring and managing its cash conversion cycle to ensure optimal working capital management and operational efficiency.