Diamondback Energy Inc (FANG)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.44 | 0.45 | 3.66 | 0.92 | 0.77 | 0.89 | 0.43 | 0.62 | 0.81 | 0.61 | 0.73 | 0.72 | 1.01 | 0.73 | 0.49 | 0.46 | 0.49 | 0.45 | 0.62 | 0.95 |
| Quick ratio | 0.03 | 0.08 | 3.23 | 0.42 | 0.28 | 0.39 | 0.01 | 0.02 | 0.16 | 0.02 | 0.03 | 0.08 | 0.46 | 0.48 | 0.50 | 0.35 | 0.52 | 0.51 | 0.05 | 0.11 |
| Cash ratio | 0.03 | 0.08 | 3.23 | 0.42 | 0.28 | 0.39 | 0.01 | 0.02 | 0.16 | 0.02 | 0.03 | 0.08 | 0.46 | 0.48 | 0.50 | 0.35 | 0.52 | 0.51 | 0.05 | 0.11 |
Based on the provided data, the liquidity ratios of Diamondback Energy Inc have shown some fluctuations over the reporting periods.
1. Current Ratio: The current ratio, which indicates the company's ability to cover its short-term liabilities with its current assets, fluctuated between 0.45 to 3.66. Initially, the ratio was below 1, indicating potential liquidity concerns, but it improved significantly in June 2024. The ratio has since stabilized around 0.4 to 1, suggesting the company's ability to meet its short-term obligations has improved.
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. The quick ratio ranged between 0.01 to 3.23. The ratio was below 1 for most periods, indicating the company may have had difficulty meeting its short-term obligations without relying on inventory. However, the ratio improved notably in June 2024, indicating a stronger position to cover short-term liabilities with more liquid assets.
3. Cash Ratio: The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents to cover current liabilities, ranged from 0.01 to 3.23. Similar to the quick ratio, the cash ratio was below 1 for most periods, suggesting Diamondback Energy Inc may not have had sufficient cash to cover its short-term obligations. The ratio saw a significant improvement in June 2024, indicating a stronger cash position.
Overall, while there were fluctuations in liquidity ratios over the reporting periods, Diamondback Energy Inc seems to have made improvements in its liquidity position, particularly evident in the stronger current and quick ratios in the most recent periods. However, continued monitoring of liquidity metrics is advisable to ensure the company's ability to meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 14.57 | 12.93 | 5.85 | 6.89 | 8.22 | 10.07 | 7.73 | 8.34 | 8.40 | 9.74 | 10.92 | 10.76 | 11.86 | 8.18 | 5.58 | 9.42 | 5.55 | 5.10 | 5.03 | 5.23 |
The cash conversion cycle of Diamondback Energy Inc has shown fluctuations over the periods analyzed. It measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 5.03 days to a high of 14.57 days. The cycle generally remained below 10 days for most periods, indicating efficient management of working capital.
There were variations in the cash conversion cycle throughout the years, with notable increases observed in March 31, 2021, and December 31, 2021, reaching 9.42 days and 11.86 days, respectively. These increases suggest potential challenges in managing cash flows and working capital during those periods.
However, the cycle showed improvements in efficiency in the subsequent quarters, with decreasing figures noted in June 30, 2024 (5.85 days) and March 31, 2024 (6.89 days). This signifies enhanced liquidity management and a quicker turnaround of investments into cash during these periods.
It is crucial for Diamondback Energy Inc to continuously monitor and optimize its cash conversion cycle to ensure effective management of its working capital and cash flow operations for sustained financial health and operational efficiency.