CleanSpark Inc (CLSK)

The liquidity ratios of CleanSpark Inc. over the period from June 2020 to March 2025 exhibit notable fluctuations, reflecting varying short-term liquidity positions.

Current Ratio Analysis:
The current ratio, indicating the company's ability to cover its current liabilities with current assets, demonstrated significant volatility. Periods such as December 2020 and March 2021 show exceptionally high ratios of 7.25 and 24.31, respectively, suggesting very strong liquidity at those times. However, subsequent periods experienced fluctuations, with ratios declining below 2 in numerous quarters, notably reaching 0.51 at the end of 2022, and remaining relatively low through most of 2023. Starting from December 2023, the ratio surged again, peaking at 12.67 in December 2024, before declining to 8.67 in March 2025. Such swings indicate inconsistent short-term liquidity management or seasonal variations in working capital.

Quick Ratio Analysis:
The quick ratio, which excludes inventories and emphasizes more liquid assets, followed a similar pattern. It peaked sharply at 22.61 in March 2021 and later reached even higher levels of 12.48 in December 2023. The periods of minimal quick liquidity occurred around December 2022 and March 2023, with ratios dropping below 1 (notably 0.16 in December 2022). The recent data point at December 2024 again exhibits elevated liquidity at 12.48, with a subsequent decline but still maintaining a strong position at 8.54 in March 2025.

Cash Ratio Analysis:
The cash ratio, reflecting the most liquid assets immediately available to satisfy current liabilities, displayed extreme variability. It reached peaks of 22.37 in March 2021 and 12.48 in December 2024, indicating periods of substantial cash holdings relative to current liabilities. Conversely, the cash ratio dipped to very low levels, such as 0.16 in December 2022 and March 2023, suggesting periods when cash reserves were comparatively scarce in relation to short-term obligations.

Overall Observation:
Throughout the observed timeframe, CleanSpark Inc.’s liquidity ratios have exhibited periods of both robust liquidity and potential liquidity constraints. The sporadic peaks may be attributed to strategic cash accumulation phases or temporary asset liquidations, whereas the troughs could signal operational challenges or rapid deployment of current assets. The recent trend indicates significant improvements in liquidity, with ratios reaching and surpassing 12 in late 2024, which may imply an accumulation of liquid assets or reduction of current liabilities. These fluctuations highlight the importance of assessing ongoing liquidity management practices within the company and their implications for short-term financial stability.

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Additional liquidity measure

The provided data indicates that CleanSpark Inc.'s cash conversion cycle (CCC) has experienced significant fluctuations over the analyzed period from June 30, 2020, to March 31, 2025. Initially, the CCC was positive at 4.15 days as of June 30, 2020, suggesting the company took slightly longer to convert its investments into cash, such as through receivables and inventory turnovers.

Subsequently, the CCC turned negative in September 2020 at -167.06 days, and this negative trend persisted through subsequent quarters, reaching as low as -421.19 days in December 2021. A negative CCC indicates that the company is able to collect receivables and sell inventory faster than it incurs payment obligations to suppliers—effectively generating cash before paying suppliers, which can be a sign of efficient working capital management or strategic supplier payment practices.

Throughout 2022 and into 2023, the negative CCC continued to fluctuate, showing periods of slight improvement and deterioration. For example, by June 30, 2022, the CCC was -118.54 days, and it remained negative but with decreasing magnitude until September 2023, when it was around -197.42 days. This pattern suggests ongoing operational efficiency but also potential variability in receivables, inventory management, or supplier payment terms.

In late 2023 and into 2024, the CCC showed signs of moving towards a less negative figure, indicating adjustments in operational practices or credit policies. Specifically, the CCC improved from approximately -197.42 days at September 2023 to -37.38 days in December 2024, nearing a more neutral position.

By March 2025, the CCC was recorded at -12.96 days, which reflects an ongoing trend toward normalization, possibly implying that the company's cash flow cycle is becoming less dependent on accelerated collections relative to payments, or that working capital management strategies are evolving.

Overall, the consistent negative nature of the cash conversion cycle over the analyzed period suggests that CleanSpark Inc. has employed operational and financial practices that allow it to generate cash before settling supplier obligations. The magnitude of the negative CCC has decreased over time, indicating a potential shift toward more balanced working capital management or changing operational efficiencies.