CleanSpark Inc (CLSK)

The liquidity ratios of CleanSpark Inc over the analyzed period demonstrate notable fluctuations, reflecting variations in the company's short-term liquidity position. The current ratio, which measures the ability to cover current liabilities with current assets, experienced a significant increase from 1.53 in September 2020 to a peak of 5.74 in September 2021, indicating a momentary strong liquidity position. Following this peak, it declined to 1.49 in September 2022 and further to 1.38 in September 2023, suggesting a reduction in liquidity coverage during these years. However, by September 2024, the current ratio substantially increased to 3.75, pointing to an improved capacity to meet short-term obligations relative to the previous period.

The quick ratio, a more stringent measure excluding inventory from current assets, showed a similar pattern. It rose sharply from 0.92 in September 2020 to 3.90 in September 2021, reinforcing the observation of heightened short-term liquidity during that period. It then declined to 0.95 in September 2022 and slightly increased to 1.16 in September 2023. By September 2024, the quick ratio climbed again to 3.69, indicating a robust liquidity position with readily available liquid assets.

The cash ratio, which assesses the company's ability to cover short-term liabilities solely with cash and cash equivalents, mirrors the trends seen in the quick ratio. It increased markedly from 0.76 in September 2020 to 3.87 in September 2021. Subsequently, it decreased to 0.95 in September 2022 and remained relatively stable at 1.16 in September 2023. Once more, a notable rise occurred by September 2024, reaching 2.95, signifying a significant strengthening in cash reserves relative to short-term liabilities.

Overall, CleanSpark Inc's liquidity ratios depict periods of strong liquidity around September 2021, followed by fluctuations in subsequent years. The renewed elevation of the ratios in 2024 suggests an improved liquidity position, with ample liquid assets and current resources available to meet short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle (CCC) of CleanSpark Inc. has exhibited a trend of movement towards a less negative value over the period from September 30, 2020, to September 30, 2024. Specifically, the CCC was recorded at -166.06 days in September 2020, indicating a substantial cycle of cash inflows exceeding outflows and a significant liquidity advantage at that time. By September 30, 2021, the CCC improved to -92.42 days, suggesting a reduction in the length of the period during which the company can operate with a favorable cash position. In subsequent years, the CCC experienced some fluctuations: it increased slightly to -108.54 days in September 2022, then moved marginally closer to zero at -102.42 days in September 2023. The most recent data from September 30, 2024, shows the CCC at -49.38 days, indicating a significant reduction in the extent of the company's cash conversion cycle.

Overall, the trend demonstrates a steady decline in the negativity of the CCC, approaching a less favorable position but still remaining negative. A negative CCC reflects that the company is able to generate cash flows before settling its bills to suppliers, which is generally a positive indicator of operational efficiency and liquidity management. The decreasing magnitude of negativity suggests that this advantage has diminished over time, potentially pointing to changes in accounts receivable, inventory management, or accounts payable cycles. Nonetheless, the company continues to maintain a negative CCC, indicating ongoing operational leverage that allows it to fund operations through its working capital cycle.