Coterra Energy Inc (CTRA)

The liquidity ratios of Coterra Energy Inc provide insights into the company's ability to meet its short-term obligations and operational needs.

1. Current ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Coterra Energy Inc's current ratio has fluctuated over the years, with a high of 1.85 in 2022 and a low of 1.07 in 2020. The current ratio has generally been above 1, indicating that the company has had sufficient current assets to cover its current liabilities.

2. Quick ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Coterra Energy Inc's quick ratio has followed a similar trend to the current ratio, ranging from 1.00 in 2020 to 1.79 in 2022. The quick ratio has consistently been above 1, indicating the company's ability to cover its short-term obligations without relying on selling inventory.

3. Cash ratio: The cash ratio focuses solely on the company's ability to cover its current liabilities with its cash and cash equivalents. Coterra Energy Inc's cash ratio has varied over the years, with a low of 0.43 in 2020 and a high of 0.86 in 2021. The cash ratio generally indicates a more conservative approach to liquidity, as it has been below 1 for most years, suggesting that the company may not hold a significant amount of cash compared to its current liabilities.

Overall, Coterra Energy Inc has maintained acceptable liquidity levels over the years, as indicated by consistent current and quick ratios above 1. However, the lower cash ratio suggests that the company may rely more on non-cash current assets to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle is a key metric that reflects how efficiently a company manages its cash flows related to its operations. Coterra Energy Inc has shown varying cash conversion cycle durations over the past five years.

In 2023, the cash conversion cycle was 55.18 days, indicating that on average it takes Coterra Energy Inc 55.18 days to convert its investments in inventory and other resources into cash receipts from sales. This slightly longer cycle compared to the previous year could suggest potential operational challenges or changes in the company's working capital management.

The year 2022 saw a cash conversion cycle of 52.83 days, which was an improvement from 2021. This reduction in the cycle duration could imply more efficient management of inventory levels, accounts receivable, and accounts payable, leading to quicker cash conversion.

In 2021, the cash conversion cycle was quite high at 109.74 days, indicating that Coterra Energy Inc took longer to convert its investments into cash compared to other years. This prolonged cycle duration may suggest inefficiencies in managing working capital components or potential problems with liquidity and cash flow management.

The year 2020 had a relatively low cash conversion cycle of 54.97 days, suggesting an improvement in the efficiency of Coterra Energy Inc's cash conversion compared to 2021. This may indicate effective working capital management strategies or other operational improvements during that period.

Lastly, in 2019, the cash conversion cycle was 59.85 days, slightly higher than the following years. It is important for Coterra Energy Inc to continuously monitor and optimize its cash conversion cycle to ensure efficient use of resources and maintain healthy liquidity levels.

Overall, evaluating the trend in Coterra Energy Inc's cash conversion cycle over the years provides insights into the company's operational efficiency, working capital management, and cash flow dynamics, helping stakeholders assess its financial health and performance.