Chesapeake Energy Corp (CHK)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.99 | 1.56 | 1.34 | 1.39 | 1.00 | 0.49 | 0.47 | 0.34 | 0.86 | 0.69 | 0.73 | 0.82 | 0.36 | 0.35 | 0.29 | 0.80 | 0.52 | 0.60 | 0.62 | 0.47 |
| Quick ratio | 1.76 | 1.09 | 1.21 | 0.77 | 0.59 | 0.43 | 0.43 | 0.32 | 0.83 | 0.66 | 0.69 | 0.72 | 0.33 | 0.32 | 0.25 | 0.37 | 0.42 | 0.42 | 0.46 | 0.41 |
| Cash ratio | 1.31 | 0.67 | 0.80 | 0.31 | 0.06 | 0.02 | 0.00 | 0.00 | 0.37 | 0.34 | 0.33 | 0.24 | 0.09 | 0.10 | 0.03 | 0.04 | 0.00 | 0.01 | 0.00 | 0.00 |
Chesapeake Energy Corp's liquidity ratios over the past several quarters show fluctuations in its ability to meet short-term obligations. The current ratio has improved steadily from 0.47 in September 2022 to 1.99 in December 2023, indicating a healthier liquidity position. This ratio suggests that the company's current assets are nearly double its current liabilities, signaling improved short-term financial stability.
The quick ratio, which excludes inventory from current assets, also paints a positive picture, despite some fluctuations. It has increased from 0.43 in September 2022 to 1.76 in December 2023. This indicates that Chesapeake Energy Corp can meet its immediate liabilities more comfortably without relying on selling its inventory.
The cash ratio has shown a significant improvement from 0.02 in September 2022 to 1.31 in December 2023, suggesting an enhanced ability to cover short-term obligations with cash and cash equivalents only. This signifies a prudent approach to liquidity management and a reduced reliance on other current assets to meet short-term debt obligations.
Overall, Chesapeake Energy Corp's liquidity ratios have shown an upward trend, reflecting an improved ability to cover short-term obligations. However, the company should continue to monitor and manage its liquidity position carefully to ensure ongoing financial stability.
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 730.16 | 967.38 | -307.06 | 1,629.93 | 739.09 | -1,180.05 | -1,044.76 | -924.12 | -820.91 | -482.31 | -403.92 | -245.23 | 38.44 | 28.75 | 24.98 | 44.84 | -313.20 | -277.65 | -413.26 | -680.18 |
The cash conversion cycle of Chesapeake Energy Corp has displayed significant fluctuations over the historical periods analyzed. The cycle provides insight into the efficiency of the company's working capital management.
In the most recent period, as of December 31, 2023, the cash conversion cycle stood at 730.16 days, indicating that it takes approximately 2 years for the company to convert its investments in inventory and receivables into cash collected from customers. This lengthy cycle may suggest potential challenges in managing inventory levels and accounts receivable turnover efficiently.
The cycle peaked at 1,629.93 days on March 31, 2023, signifying a prolonged cash conversion process. Conversely, negative cycles were observed in June and September 2023, implying that the company was able to convert its resources into cash at a quicker pace during those periods.
Overall, the company has experienced both positive and negative cash conversion cycles, suggesting fluctuations in working capital management effectiveness. It is essential for Chesapeake Energy Corp to monitor and optimize its inventory levels, accounts receivable processes, and accounts payable terms to maintain a healthy and efficient cash conversion cycle in the future.