Civitas Resources Inc (CIVI)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.16 | 1.13 | 0.64 | 1.24 | 1.06 |
| Quick ratio | 0.88 | 0.94 | 0.55 | 0.77 | 0.52 |
| Cash ratio | 0.61 | 0.65 | 0.23 | 0.33 | 0.11 |
Civitas Resources Inc's liquidity ratios display fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, improved from 2019 to 2020, but then declined in 2021 before recovering slightly in 2022 and 2023. The company's current ratio ranged from 0.64 to 1.24 over the period, with the latest ratio standing at 1.16.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar trend to the current ratio. It improved in 2020, dropped in 2021, and then rose again in 2022 and 2023. The quick ratio ranged from 0.63 to 1.16, with the latest figure matching the current ratio at 1.16.
The cash ratio, which assesses the proportion of current liabilities that can be covered by cash and cash equivalents, showed a more significant improvement from 2019 to 2020, followed by fluctuations in subsequent years. The cash ratio ranged from 0.20 to 0.75, with the latest ratio at 0.75.
Overall, while there have been fluctuations, the company's liquidity position seems to have strengthened in recent years, as evidenced by the improvement in all three liquidity ratios. However, it is important for Civitas Resources Inc to continue monitoring and managing its liquidity effectively to ensure it can meet its short-term obligations in a sustainable manner.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 96.75 | 33.33 | 136.33 | 71.75 | -2.82 |
The cash conversion cycle of Civitas Resources Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 79.02 days from 46.14 days in the previous year, indicating an increase in the time it takes for the company to convert its investments in inventory and other resources into cash from sales. This increase may suggest potential challenges in managing working capital efficiently.
Comparing the 2023 figure to the results of previous years, the cash conversion cycle was notably lower than the peak reached in 2021 at 168.12 days, but higher than the 79.36 days recorded in 2020 and the 95.38 days in 2019. This fluctuation suggests that the company has experienced varying levels of efficiency in managing its inventory, accounts receivable, and accounts payable during these periods.
Overall, a cash conversion cycle of 79.02 days in 2023 indicates that Civitas Resources Inc takes approximately 79 days to convert its investments in inventory and other resources into cash from sales. Monitoring and potentially improving the cash conversion cycle could be pivotal for the company's working capital management and overall financial health going forward.