Comstock Resources Inc (CRK)

The liquidity ratios of Comstock Resources, Inc. indicate the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has shown fluctuation over the past five years. The ratio decreased from 0.74 in 2019 to 0.45 in 2020 before recovering slightly to 0.68 in 2023. A current ratio below 1 suggests that the company may have difficulty meeting its short-term obligations using only its current assets.

The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more conservative measure of liquidity. Similar to the current ratio, the quick ratio has also shown variability, ranging from 0.73 in 2019 to 0.49 in 2021 before improving to 0.68 in 2023. A quick ratio below 1 indicates that the company may struggle to meet its short-term obligations without relying on selling inventory.

The cash ratio, the most stringent measure of liquidity, represents the company's ability to pay off its current liabilities using only its cash and cash equivalents. Comstock Resources, Inc. has demonstrated a significant improvement in its cash ratio over the years, with the ratio increasing from 0.24 in 2019 to 0.33 in 2023. This suggests that the company has enhanced its ability to cover its short-term liabilities solely with cash on hand.

Overall, while the company's liquidity ratios have shown some improvement in recent years, particularly in terms of the cash ratio, the current and quick ratios still indicate potential challenges in meeting short-term obligations. It is essential for Comstock Resources, Inc. to continue monitoring and managing its liquidity position to ensure financial stability and meet its operational requirements effectively.

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Additional liquidity measure

The cash conversion cycle of Comstock Resources, Inc. has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle was 55.31 days, which increased compared to the previous year but remained relatively stable compared to 2021. This indicates that the company took approximately 55 days to convert its investments in inventory and other resources into cash inflows from sales.

In 2022, the cash conversion cycle improved to 52.44 days, reflecting a more efficient management of working capital compared to 2021. However, in 2021, the cycle increased to 54.36 days from 2020, indicating a potential slow-down in converting resources into cash during that period.

Notably, in 2020, the cash conversion cycle was 65.37 days, which was significantly lower than the cycle in 2019, which was 89.80 days. This suggests that the company has made significant improvements in managing its working capital efficiency over the two-year period.

Overall, the fluctuating trend of the cash conversion cycle for Comstock Resources, Inc. indicates varying levels of efficiency in managing its working capital and converting investments into cash inflows over the past five years.