Civitas Resources Inc (CIVI)

Civitas Resources Inc's liquidity ratios show fluctuations over the years, indicating changes in the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- From March 2020 to June 2022, the current ratio decreased steadily, indicating a potential liquidity challenge.
- However, from June 2022 to June 2023, there was a significant improvement, with the ratio jumping to 2.80, showing a strong ability to meet short-term obligations.
- The ratio declined again in the following quarters but remained above 1, except for March 2024, suggesting a moderate short-term liquidity position.

2. Quick Ratio:
- The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity.
- Similar to the current ratio, the quick ratio exhibited fluctuations over the years.
- The ratio saw a significant spike in June 2023 to 2.38, indicating a substantial improvement in the company's ability to meet short-term obligations without relying on inventory.
- Despite some variability, the quick ratio generally stayed above 0.33, indicating a reasonable level of liquidity.

3. Cash Ratio:
- The cash ratio measures the company's ability to cover its short-term liabilities with its cash and cash equivalents.
- Civitas Resources Inc's cash ratio fluctuated significantly over the years but generally remained at low levels.
- The ratio peaked at 2.21 in June 2023, suggesting a strong cash position at that time.
- However, the ratio dropped in subsequent quarters but remained above 0.02, indicating some capacity to cover short-term obligations with cash.

Overall, Civitas Resources Inc's liquidity ratios show varying trends, with periods of improvement followed by declines. While the company experienced some liquidity challenges, it generally maintained a sufficient level of liquidity to meet its short-term obligations. Ongoing monitoring of these ratios is essential to assess the company's financial health and liquidity position accurately.

---

Additional liquidity measure

The cash conversion cycle of Civitas Resources Inc has shown fluctuations over the periods analyzed. It indicates how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From March 2020 to December 2024, the company's cash conversion cycle ranged from -2.19 days to 149.09 days, with an overall trend towards longer cycles in recent periods.

The negative value in March 2020 suggests that the company was able to convert its investments into cash faster than its payables were due. However, as the cycle turned positive in the following quarters, it indicates that the company took longer to convert its resources into sales and subsequently into cash.

The peak cycle of 149.09 days in June 2023 suggests a significant delay in converting investments into cash flows, which may have been caused by issues such as slower sales or difficulties in managing inventory levels.

Overall, the upward and downward fluctuations in the cash conversion cycle of Civitas Resources Inc reflect variations in the efficiency of its working capital management and liquidity position over the periods analyzed. Efficient management of the cash conversion cycle is essential for ensuring adequate cash flows and optimizing the company's overall financial performance.