Crescent Energy Co (CRGY)

Crescent Energy Co's current ratio, a measure of short-term liquidity, fluctuated over the period under review. It started at 0.96 on March 31, 2021, indicating that the company had almost enough current assets to cover its current liabilities. However, the ratio declined to 0.50 by September 30, 2021, then recovered to 1.03 by September 30, 2023, before decreasing to 0.95 by December 31, 2024. The current ratio peaked at 1.87 on June 30, 2024, suggesting a strong liquidity position at that point.

The quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, also experienced fluctuations. It ranged from a low of -0.01 on December 31, 2022, to a high of 1.10 on June 30, 2024. The company had a quick ratio below 1 for several periods, indicating potential difficulty in meeting its short-term obligations without relying on inventory sales.

The cash ratio, which measures a company's ability to cover its current liabilities with its most liquid assets (cash and cash equivalents), mirrored the trends seen in the quick ratio. It fluctuated notably, with values ranging from -0.01 on December 31, 2022, to a high of 1.10 on June 30, 2024. This suggests that Crescent Energy Co may have had varying levels of cash on hand relative to its immediate obligations throughout the period.

Overall, Crescent Energy Co's liquidity ratios show some volatility and potential challenges in meeting short-term obligations without relying on inventory or other assets. It would be important for the company to closely monitor its liquidity position to ensure it can meet its financial commitments as they come due.

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Additional liquidity measure

The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. For Crescent Energy Co, the cash conversion cycle has varied over the years based on the given data.

From March 31, 2021, to June 30, 2022, the company managed to maintain a very efficient cash conversion cycle with zero days, indicating that it quickly converted its inventory and other resources into cash from sales. However, from June 30, 2022, to December 31, 2024, the cash conversion cycle started to show fluctuations, indicating potential challenges in efficiently managing the cash flow from operations.

The biggest increase in the cash conversion cycle was observed from June 30, 2022, to June 30, 2023, when it spiked to 96.76 days. This significant increase may suggest issues with managing inventory levels, collection of receivables, or timing of payments to suppliers, which can lead to liquidity constraints or inefficiencies in the company's working capital management.

While there were fluctuations in the cash conversion cycle, it seems that Crescent Energy Co made some improvements by reducing the cycle to 8.07 days as of September 30, 2024. This reduction could indicate that the company took measures to streamline its operations, optimize inventory levels, or improve its receivables collection processes during that period.

In conclusion, Crescent Energy Co has experienced fluctuations in its cash conversion cycle over the years, indicating varying efficiency in managing its working capital. Monitoring and analyzing the trends in the cash conversion cycle can help the company identify areas for improvement in its cash flow management and overall operational efficiency.