ChampionX Corporation (CHX)

Based on the provided data, ChampionX Corporation's liquidity ratios show the following trend:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets.
- ChampionX Corporation's current ratio has been showing a slight decline from 2.03 in 2020 to 1.99 in 2024.
- The ratio remains above 1, which indicates the company has more current assets than current liabilities across the years.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity compared to the current ratio as it excludes inventory from current assets.
- ChampionX Corporation's quick ratio has shown some fluctuations but has generally decreased from 1.22 in 2020 to 1.24 in 2024.
- The quick ratio above 1 indicates that the company can meet its short-term obligations without relying on selling inventory.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on a company's ability to cover its current liabilities with cash and cash equivalents.
- ChampionX Corporation's cash ratio has improved significantly from 0.32 in 2020 to 0.65 in 2024.
- The rising trend indicates that the company has strengthened its ability to cover its short-term obligations with cash on hand.

In conclusion, while ChampionX Corporation's liquidity ratios have shown some fluctuations over the years, the company generally maintains adequate liquidity levels to meet its short-term obligations. The increasing cash ratio is a positive sign of improved liquidity management.

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Additional liquidity measure

Based on the data provided for ChampionX Corporation's cash conversion cycle over the past five years, there has been a noticeable improvement in the efficiency of their cash conversion cycle.

As of December 31, 2020, the cash conversion cycle was 139.43 days, indicating that it took the company 139.43 days to convert its investments in inventory and accounts receivable into cash. Over the subsequent years, there has been a consistent decline in the cash conversion cycle:

- By December 31, 2021, the cash conversion cycle had decreased to 80.23 days.
- Continuing this trend, by December 31, 2022, it further decreased to 66.81 days.
- By December 31, 2023, the cash conversion cycle had reduced to 61.65 days.
- Most recently, as of December 31, 2024, the cash conversion cycle stood at 53.05 days, indicating a further improvement in the company's ability to convert its working capital into cash efficiently.

Overall, the decreasing trend in the cash conversion cycle over the specified years suggests that ChampionX Corporation has been managing its working capital more effectively and efficiently. This improvement may signify better inventory management, faster collection of receivables, or a lengthening of payables, ultimately contributing to enhanced liquidity and potentially improved financial performance for the company.