Hess Corporation (HES)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.12 | 1.05 | 1.72 | 1.42 | 1.90 |
| Quick ratio | 0.41 | 0.52 | 1.09 | 0.89 | 1.07 |
| Cash ratio | 0.41 | 0.52 | 1.09 | 0.89 | 1.07 |
The liquidity ratios of Hess Corporation have shown some fluctuations over the years.
1. Current Ratio: The company's current ratio has varied from a high of 1.90 in 2020 to a low of 1.05 in 2023. A current ratio above 1 indicates that the company has more current assets than current liabilities to cover its short-term obligations. However, the decreasing trend from 2020 to 2023 suggests that the company may have faced challenges in managing its short-term liquidity position during this period. The ratio improved slightly in 2024 to 1.12, which is still considered acceptable for most investors and creditors.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Similar to the current ratio, the quick ratio shows fluctuations over the years. The ratio decreased from 1.07 in 2020 to 0.52 in 2023, indicating a potential strain in meeting short-term obligations without relying on inventory. Hess Corporation improved its quick ratio to 0.41 in 2024, suggesting a need for cautious monitoring of liquidity.
3. Cash Ratio: The cash ratio measures the company's ability to cover its short-term liabilities using only cash and cash equivalents. The cash ratio provides the most conservative view of liquidity. Hess Corporation's cash ratio followed a similar trend as the quick ratio, showing a decrease from 1.07 in 2020 to 0.52 in 2023 before improving to 0.41 in 2024. This indicates that the company may have faced challenges in maintaining sufficient cash reserves to meet short-term obligations during this period.
In summary, while the liquidity ratios of Hess Corporation have experienced fluctuations, the company has managed to maintain a relatively stable liquidity position overall. However, the decreasing trends in the ratios from 2020 to 2023 suggest that Hess Corporation may need to focus on optimizing its liquidity management strategies to ensure it has sufficient resources to meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 56.21 | 49.05 | 23.23 | 27.79 | 40.39 |
The cash conversion cycle of Hess Corporation has shown variations over the years based on the provided data.
- As of December 31, 2020, the cash conversion cycle was 40.39 days, indicating that the company took approximately 40 days to convert its investments in inventory and accounts receivable into cash.
- By December 31, 2021, the cash conversion cycle improved to 27.79 days, suggesting a more efficient management of working capital and faster conversion of assets into cash.
- The trend continued into December 31, 2022, with a further reduction in the cash conversion cycle to 23.23 days, signaling enhanced operational efficiency.
- However, by December 31, 2023, there was a noticeable increase in the cash conversion cycle to 49.05 days, potentially indicating challenges in managing working capital or delays in converting assets into cash.
- The year 2024 saw a further increase in the cash conversion cycle to 56.21 days, possibly pointing towards extended timelines in the conversion of investments into cash.
Overall, fluctuations in the cash conversion cycle of Hess Corporation over the years reflect changes in the company's efficiency in managing working capital and converting investments into cash, which could impact its liquidity and financial performance.