Dorian LPG Ltd (LPG)

Dorian LPG Ltd's liquidity ratios have shown a positive trend over the past five years, indicating an improvement in the company's ability to meet its short-term obligations and manage its cash position effectively.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has increased from 1.64 in 2020 to 3.62 in 2024. This indicates that the company has significantly strengthened its liquidity position and is in a better position to fulfill its current obligations.

The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more conservative measure of liquidity. Dorian LPG Ltd's quick ratio has also shown a positive trend, increasing from 1.54 in 2020 to 3.41 in 2024. This indicates that the company has a strong ability to meet its short-term obligations using its most liquid assets.

The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also improved significantly over the years. Dorian LPG Ltd's cash ratio has increased from 0.74 in 2020 to 2.89 in 2024, signaling that the company has a higher level of cash to cover its short-term liabilities.

Overall, Dorian LPG Ltd's liquidity ratios paint a favorable picture of the company's financial health, showing a consistent improvement in its ability to meet short-term obligations and effectively manage its cash resources.

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Additional liquidity measure

Dorian LPG Ltd's cash conversion cycle has exhibited fluctuations over the past five years. The company's cash conversion cycle decreased to 16.52 days as of March 31, 2024, from 41.77 days in the previous year. This indicates that the company has efficiently managed its working capital, resulting in a shorter cash conversion cycle.

Comparing it with previous years, Dorian LPG Ltd had a relatively longer cash conversion cycle of 51.81 days in March 31, 2022, and reduced it to 38.82 days in March 31, 2021. However, in March 31, 2020, the company experienced the shortest cash conversion cycle of 29.22 days over the five-year period.

Overall, the decreasing trend in the cash conversion cycle from 2020 to 2024 suggests that Dorian LPG Ltd has been improving its efficiency in converting its investments in inventory and receivables into cash more rapidly. This efficiency can have positive implications for the company's liquidity and cash flow management.