Crescent Energy Co (CRGY)

Crescent Energy Co's liquidity position, as evidenced by its current ratio, has exhibited volatility over the past three years. The current ratio decreased from 0.78 in 2021 to 0.58 in 2022, before slightly improving to 0.82 in 2023. Despite the uptick in 2023, the current ratio remains below 1, suggesting that the company may face challenges in meeting its short-term obligations with its current assets.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also showed variability. The ratio declined from 0.76 in 2021 to 0.51 in 2022 before dropping to 0.00 in 2023. A quick ratio of 0.00 in 2023 indicates that Crescent Energy Co may have difficulty covering its immediate liabilities with its most liquid assets in that year.

Furthermore, the cash ratio, which only considers cash and cash equivalents as a measure of liquidity, remained at 0.21 in 2021 before decreasing to 0.00 in both 2022 and 2023. This suggests that Crescent Energy Co's ability to pay off its current liabilities solely with its cash reserves has weakened in the last two years.

Overall, the liquidity ratios paint a concerning picture of Crescent Energy Co's ability to cover its short-term obligations. The downward trend in the quick and cash ratios, coupled with the consistently low current ratio, indicates potential liquidity challenges that the company may need to address to ensure its financial health and ability to meet its obligations in the future.

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Additional liquidity measure

The cash conversion cycle of Crescent Energy Co has shown improvement over the past three years. In 2021, the company had a significantly negative cash conversion cycle of -303.43 days, indicating that it took quite a long time for the company to convert its investments in inventory and accounts receivable into cash.

However, by the end of 2023, Crescent Energy Co managed to reduce this cycle to -34.31 days, which reflects a more efficient management of cash flows and working capital. The decreasing trend in the cash conversion cycle suggests that the company has been able to streamline operations, manage inventory levels, and collect receivables more effectively.

A negative cash conversion cycle means that the company is able to receive cash from customers before having to pay its suppliers, which can be seen as a positive indicator of liquidity and operational efficiency. Crescent Energy Co's improved cash conversion cycle over the three-year period demonstrates the company's efforts to optimize its working capital management and enhance its financial performance.