ConocoPhillips (COP)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.43 | 1.46 | 1.34 | 2.25 | 2.40 |
| Quick ratio | 0.66 | 0.72 | 0.52 | 1.25 | 1.64 |
| Cash ratio | 0.66 | 0.72 | 0.51 | 1.23 | 1.15 |
Conoco Phillips' liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations and financial flexibility.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a declining trend over the past five years. As of December 31, 2023, the current ratio stands at 1.43, indicating that the company has $1.43 in current assets for every $1 in current liabilities. While the current ratio above 1 indicates that the company can cover its short-term obligations, the decreasing trend suggests a potential weakening of liquidity position over time.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also exhibits a declining trend. As of December 31, 2023, the quick ratio is 1.29, which may indicate a relatively lower level of immediate liquidity compared to the current ratio. A quick ratio above 1 implies that the company can meet its short-term obligations without relying on selling inventory.
The cash ratio, the most conservative liquidity measure that considers only cash and cash equivalents in relation to current liabilities, also shows a decrease over the years. As of December 31, 2023, the cash ratio is 0.75, indicating that the company has $0.75 in cash and cash equivalents for every $1 in current liabilities.
Overall, the liquidity ratios of Conoco Phillips demonstrate a declining trend, which may raise concerns about the company's ability to meet its short-term obligations. It is essential for investors and stakeholders to monitor these ratios closely to assess the company's liquidity position and financial health.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 22.03 | -50.90 | -68.10 | -60.24 | -25.47 |
The cash conversion cycle of Conoco Phillips has shown a relatively consistent pattern over the past five years. The company's cash conversion cycle, a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has been negative each year.
A negative cash conversion cycle indicates that Conoco Phillips is able to cycle through its cash at a faster rate than the time it takes to pay off its short-term obligations. This can be seen as a favorable sign, as it suggests that the company is able to efficiently manage its working capital and generate cash inflows quickly from its sales.
In particular, over the last five years, the cash conversion cycle has ranged from -20.16 days to -28.89 days. This trend indicates that Conoco Phillips has been consistently efficient in managing its cash flow operations. The company has been able to reduce the time it takes to convert its investments in inventory and other resources into cash from sales over the years, resulting in a shorter cash conversion cycle.
Overall, the negative cash conversion cycle of Conoco Phillips reflects the company's strong working capital management and efficient cash flow generation from its core operations.