Civitas Resources Inc (CIVI)

Civitas Resources Inc's liquidity ratios show a mixed performance over the years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.24 in 2020 to 0.45 in 2024. This declining trend indicates potential liquidity challenges, as the current assets may not be sufficient to cover current liabilities.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also decreased from 0.77 in 2020 to 0.33 in 2024. This indicates that Civitas Resources Inc may have difficulties in meeting its short-term obligations without relying on selling inventory.

The cash ratio, which specifically focuses on the company's ability to cover current liabilities with only cash and cash equivalents, decreased significantly from 0.33 in 2020 to 0.03 in 2024. This suggests a significant reduction in the company's ability to pay off its immediate obligations with the most liquid assets.

Overall, the declining trend in all three liquidity ratios raises concerns about Civitas Resources Inc's short-term liquidity position and suggests a potential need for improved cash management and liquidity management strategies to ensure the company can meet its financial obligations in the short term.

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Additional liquidity measure

Civitas Resources Inc's cash conversion cycle has undergone fluctuations over the five-year period analyzed. In December 2020, the company's cash conversion cycle stood at 71.75 days, indicating that it took just over two months to convert its investments in inventory back into cash. By December 2021, the cycle significantly increased to 136.33 days, suggesting a prolonged period required to convert inventory into sales and ultimately into cash.

However, in December 2022, there was a substantial improvement as the cash conversion cycle decreased to 33.33 days, signaling an enhanced efficiency in managing inventory, accounts receivable, and accounts payable. The trend continued positively in December 2023 with a cycle of 43.62 days, indicating a relatively short turnaround time for cash generation from operations.

By December 2024, the cash conversion cycle slightly increased to 39.66 days compared to the previous year but remained lower than the levels in 2021 and 2022, demonstrating continued efficiency in managing working capital.

Overall, Civitas Resources Inc has experienced fluctuations in its cash conversion cycle over the years, with significant improvements in efficiency in inventory management and cash generation observed in the latter years of the period analyzed.