Liberty Oilfield Services Inc (LBRT)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.27 | 1.49 | 1.47 | 1.11 | 1.59 |
| Quick ratio | 0.31 | 0.35 | 0.97 | 0.75 | 1.14 |
| Cash ratio | 0.03 | 0.06 | 0.07 | 0.04 | 0.19 |
Liberty Oilfield Services Inc's liquidity ratios show fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 1.59 in 2020 to 1.27 in 2024. While the current ratio remained above 1 in most years, indicating the company's ability to meet its short-term liabilities, the downward trend suggests a potential decrease in liquidity.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, decreased from 1.14 in 2020 to 0.31 in 2024. This declining trend indicates a reduction in the company's ability to cover its short-term obligations without relying on inventory, possibly raising concerns about its immediate liquidity position.
Lastly, the cash ratio, reflecting the company's ability to cover its current liabilities with its cash and cash equivalents, also declined from 0.19 in 2020 to 0.03 in 2024. This significant decrease suggests a decreasing ability to pay off short-term obligations solely with existing cash reserves, highlighting potential liquidity challenges for Liberty Oilfield Services Inc.
Overall, the declining trend in all three liquidity ratios indicates a potential liquidity strain for the company in recent years, requiring closer monitoring and management of its short-term cash position to ensure its ability to meet financial obligations in a timely manner.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 4.02 | 5.59 | 39.25 | 36.53 | 99.27 |
The cash conversion cycle of Liberty Oilfield Services Inc has shown a significant improvement over the period from December 31, 2020, to December 31, 2024. The company's cash conversion cycle decreased from 99.27 days in 2020 to 4.02 days in 2024. This declining trend indicates that the company has become more efficient in managing its working capital and converting its investments in raw materials into cash.
A lower cash conversion cycle is generally favorable as it signifies that the company is able to collect payments from customers more quickly, manage its inventory efficiently, and extend payment to suppliers effectively. Liberty Oilfield Services Inc's ability to reduce its cash conversion cycle demonstrates improved liquidity and operational efficiency, allowing the company to optimize its cash flows and invest in growth opportunities more effectively.