Helmerich and Payne Inc (HP)

Based on the liquidity ratios of Helmerich and Payne Inc over the past five years, we can observe the following trends:

1. Current Ratio:
- The current ratio measures the company's ability to meet its short-term obligations with its current assets. A higher current ratio is typically considered favorable as it indicates a stronger liquidity position.
- Helmerich and Payne's current ratio has fluctuated over the years, with a significant decrease in 2021 followed by an increase in 2022 and 2024.
- The current ratio was at its highest in 2020 (4.40), signifying a strong ability to cover short-term obligations with 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.
- Similar to the current ratio, the quick ratio of Helmerich and Payne has varied over the years, with improvements in 2022 and 2024 compared to 2021.
- The quick ratio reached its peak in 2020 (3.51), indicating a strong ability to meet short-term obligations without relying on inventory.

3. Cash Ratio:
- The cash ratio focuses solely on the company's ability to cover its short-term liabilities with cash and cash equivalents, providing the most conservative measure of liquidity.
- Helmerich and Payne's cash ratio has also fluctuated, with a notable decrease in 2023 followed by an increase in 2024.
- The cash ratio was highest in 2020 (2.63), suggesting a strong ability to meet short-term obligations with cash on hand.

Overall, while there have been fluctuations in the liquidity ratios of Helmerich and Payne over the years, the company generally maintained a solid liquidity position, especially evident in 2020 with high current, quick, and cash ratios. Monitoring these ratios can provide insights into the company's short-term liquidity management and financial health.

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Additional liquidity measure

The cash conversion cycle for Helmerich and Payne Inc has shown fluctuations over the past five years, indicating varying efficiency in managing its working capital. In Sep 2024, the cash conversion cycle increased to 52.12 days compared to the previous year, suggesting a potential slowdown in converting inventory into cash. However, this was still an improvement from the cycle in 2022, which was significantly higher at 72.61 days.

In 2023, the company managed to reduce the cycle to 44.49 days, indicating a more efficient utilization of cash resources. The cycle in 2021 and 2020 was also higher, reflecting challenges in managing inventory, accounts receivable, and accounts payable effectively.

Overall, Helmerich and Payne Inc should focus on optimizing its cash conversion cycle to enhance liquidity and operational efficiency. Monitoring inventory turnover, collection periods for receivables, and payment periods for payables could help in streamlining the cash conversion cycle and improving the company's working capital management.