Freeport-McMoran Copper & Gold Inc (FCX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.42 | 2.46 | 2.52 | 2.72 | 2.47 |
| Quick ratio | 1.16 | 1.65 | 1.67 | 1.48 | 1.02 |
| Cash ratio | 0.87 | 1.36 | 1.37 | 1.07 | 0.66 |
The liquidity ratios of Freeport-McMoRan Inc over the past five years indicate the company's ability to meet its short-term financial obligations.
1. Current ratio: The current ratio measures the company's ability to pay off its short-term liabilities with its current assets. Freeport-McMoRan's current ratio has been relatively stable over the years, ranging from 2.42 in 2023 to 2.72 in 2020. This suggests that the company has a strong ability to cover its short-term obligations with its current assets.
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. Freeport-McMoRan's quick ratio has shown some fluctuations, with a notable decrease from 1.75 in 2021 to 1.17 in 2023. Despite the fluctuations, the company's quick ratio remains above 1, indicating that it can meet its short-term obligations without relying heavily on inventory.
3. Cash ratio: The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents. Freeport-McMoRan's cash ratio has also fluctuated over the years, with a notable decrease from 1.46 in 2021 to 0.88 in 2023. While the cash ratio has decreased, it is above 0.5, indicating that the company holds sufficient cash to cover its short-term liabilities.
Overall, the liquidity ratios of Freeport-McMoRan Inc suggest that the company has maintained a strong liquidity position, with the ability to meet its short-term obligations using its current assets and cash reserves. However, the fluctuations in the quick and cash ratios highlight the importance of monitoring the company's liquidity position to ensure continued financial stability.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 105.14 | 82.64 | 86.04 | 104.79 | 90.11 |
The cash conversion cycle of Freeport-McMoRan Inc has exhibited fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 122.84 days, marking a significant rise from the previous year. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash during the year.
Compared to 2022, the cash conversion cycle in 2021 decreased slightly to 102.62 days, indicating improvements in the efficiency of managing working capital during that period. However, this trend reversed in 2022, as the cycle increased to 98.14 days, signaling a potential delay in cash conversion efficiency.
The cash conversion cycle was relatively high in 2020, standing at 124.36 days. This suggests that Freeport-McMoRan Inc faced challenges in efficiently converting its resources into cash that year. In contrast, in 2019, the company improved its cash conversion cycle to 106.26 days, indicating better management of working capital and quicker cash conversion.
Overall, fluctuations in the cash conversion cycle of Freeport-McMoRan Inc over the five-year period may point to varying efficiency in managing working capital, which could impact the company's liquidity and operational performance. Tracking and analyzing these changes can provide insights into the company's financial health and operational effectiveness.