CNX Resources Corp (CNX)

CNX Resources Corp's liquidity ratios show a concerning trend over the period from December 31, 2020, to December 31, 2024.

1. Current Ratio: The current ratio decreased from 0.62 in 2020 to 0.33 in 2024. This declining trend indicates that the company's current assets may not be sufficient to cover its current liabilities, potentially impacting its short-term financial health.

2. Quick Ratio: The quick ratio also decreased over the same period, from 0.38 in 2020 to 0.19 in 2024. This suggests that CNX Resources Corp may struggle to meet its short-term obligations without relying on inventory, which could pose a liquidity risk.

3. Cash Ratio: The cash ratio fluctuated inconsistently, with a substantial increase in 2023 to 0.89 before dropping back to 0.02 in 2024. While the high cash ratio in 2023 indicates a strong ability to pay off short-term liabilities with cash, the significant decline in 2024 raises concerns about the company's cash position.

In summary, CNX Resources Corp's liquidity ratios depict a deteriorating liquidity position, as evidenced by the declining current and quick ratios over the analyzed period. The fluctuations in the cash ratio further highlight potential challenges in managing short-term obligations solely through available cash reserves. Investors and stakeholders may need to closely monitor the company's liquidity management strategies to address these concerning trends.

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Additional liquidity measure

The cash conversion cycle for CNX Resources Corp has displayed a significant and consistent downward trend over the past five years. In December 31, 2020, the company had a negative cash conversion cycle of -16.77 days, indicating that it was efficient in converting its investments in inventory and accounts receivable into cash. By December 31, 2024, this trend continued, with the cash conversion cycle further decreasing to -210.11 days.

The negative values suggest that CNX Resources Corp is effectively managing its working capital, reducing the time it takes to convert resources invested in inventory and accounts receivable into cash generated from sales. The company is able to quickly turn its investments into revenue, indicating strong liquidity and operational efficiency.

The sharp decline in the cash conversion cycle over the years indicates that CNX Resources Corp has been successful in optimizing its working capital management strategies. This efficiency in cash conversion can lead to improved financial performance, increased profitability, and greater competitiveness in the industry.