CVR Energy Inc (CVI)

CVR Energy Inc's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insight into the company's ability to meet its short-term obligations and cover immediate financial needs.

Starting with the current ratio, which indicates the company's ability to pay off its short-term liabilities with its current assets, we observe a fluctuating trend over the past five years. In 2023, the current ratio stood at 1.30, showing an improvement from the previous year but still relatively lower compared to 2020 and 2019. This implies that CVR Energy has $1.30 in current assets for every $1 in current liabilities in 2023.

Moving on to the quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, we find that CVR Energy's quick ratio has also shown variability over the years. In 2023, the quick ratio was 0.94, indicating that the company had $0.94 in liquid assets (excluding inventory) to cover each dollar of short-term liabilities.

Lastly, the cash ratio, which assesses a company's ability to cover immediate liabilities with its cash and cash equivalents, demonstrates CVR Energy's liquidity position in terms of its cash holdings. The cash ratio increased to 0.77 in 2023, reflecting an improvement compared to the prior year but still lower than the levels seen in 2020 and 2019.

Overall, while CVR Energy Inc has shown some improvement in its liquidity ratios in 2023 compared to the previous year, the company should continue to monitor and manage its liquidity position effectively to ensure it can meet its short-term obligations and maintain financial stability.

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Additional liquidity measure

The cash conversion cycle of CVR Energy Inc has been fluctuating over the past five years. In 2023, the company's cash conversion cycle decreased to 15.14 days from 17.28 days in 2022. This indicates that the company's ability to convert its investments in inventory back into cash improved during the year.

Comparing with the previous years, the cash conversion cycle was highest in 2021 at 19.50 days, which could suggest that the company took more time to convert its inventory into sales and eventually into cash in that year. The cycle decreased slightly in 2020 to 18.26 days and was significantly lower in 2019 at 8.78 days.

Overall, a lower cash conversion cycle is favorable as it indicates that the company is able to generate cash quickly from its sales and manage its working capital efficiently. The trend of decreasing cash conversion cycle over the years reflects potential improvements in inventory management, sales efficiency, and collection of receivables, which could contribute to the company's liquidity and overall financial health.