ChampionX Corporation (CHX)

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 1.99 1.94 1.99 1.83 1.82 1.87 1.82 1.75 1.74 1.85 1.95 1.85 1.82 1.87 1.97 2.06 2.03 2.15 2.25 2.54
Quick ratio 1.24 1.11 1.15 1.06 1.05 1.01 0.96 0.94 0.99 1.00 1.04 1.00 1.04 1.12 1.19 1.25 1.22 1.20 1.18 1.37
Cash ratio 0.65 0.53 0.54 0.48 0.37 0.36 0.32 0.29 0.29 0.24 0.22 0.21 0.31 0.34 0.35 0.41 0.32 0.30 0.25 0.27

ChampionX Corporation's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been gradually decreasing from 2.54 in March 2020 to 1.99 in June 2024. While the current ratio remains above 1, suggesting the company has sufficient current assets to cover its current liabilities, the downward trend may indicate a potential liquidity concern.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also shows a decreasing trend from 1.37 in March 2020 to 1.24 in December 2024. This indicates that ChampionX may have difficulties meeting its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio, reflects the company's ability to cover its current liabilities using only cash and cash equivalents. The cash ratio has fluctuated over the years, with an increase from 0.27 in March 2020 to 0.65 in December 2024. This suggests that ChampionX has gradually improved its cash reserves relative to its short-term obligations.

Overall, while the current ratio and quick ratio show a decreasing trend, the cash ratio indicates an improvement in ChampionX Corporation's cash position over the years. Managing liquidity effectively will be crucial for the company to meet its short-term obligations and sustain its operations.

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 53.05 56.53 51.38 47.70 61.65 62.13 55.29 57.22 66.81 70.53 80.66 91.06 80.23 83.70 88.86 103.17 139.43 198.54 288.53 116.89

The cash conversion cycle (CCC) of ChampionX Corporation has shown fluctuations over the periods covered. In the most recent financial information available, as of December 31, 2024, the company's CCC stands at 53.05 days. This represents the average number of days it takes for the company to convert its investments in inventory and other resources into cash receipts from customers.

Analyzing the trend over time, we can observe that ChampionX Corporation has been able to gradually reduce its CCC from 116.89 days on March 31, 2020, to the current 53.05 days as of December 31, 2024. This indicates an improvement in the efficiency of the company's working capital management and indicates that the company is managing its inventory, accounts receivable, and accounts payable effectively.

A lower CCC is generally favorable as it suggests that the company is able to generate cash quickly from its operating activities. The decreasing trend in ChampionX Corporation's CCC over the years reflects positively on its liquidity and operational efficiency.

However, it is important to continue monitoring the CCC to ensure that the company maintains an optimal balance between managing its working capital effectively and maximizing its cash flow from operations. Regular analysis of the CCC can provide insights into the company's performance and may help identify opportunities for further improvement in working capital management strategies.