Dorian LPG Ltd (LPG)

Dorian LPG Ltd's liquidity ratios have shown a positive trend over the years, indicating the company's improving ability to meet its short-term financial obligations.

1. Current Ratio:
- The current ratio, which measures the company's ability to pay its short-term liabilities with its current assets, has increased consistently from 1.64 in March 2021 to 3.62 in March 2024.
- A current ratio above 1 signifies that the company has more current assets than current liabilities, indicating good liquidity levels.
- Dorian LPG Ltd's current ratio has steadily improved, reflecting a stronger financial position.

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.
- Dorian LPG Ltd's quick ratio has followed a similar positive trend, increasing from 1.41 in March 2021 to 3.41 in March 2024.
- The increasing quick ratio indicates that the company has a sufficient level of highly liquid assets to cover its short-term liabilities, enhancing its ability to meet immediate financial obligations.

3. Cash Ratio:
- The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents to cover current liabilities, has also shown significant improvement.
- Dorian LPG Ltd's cash ratio has increased from 0.74 in March 2021 to 2.89 in March 2024, indicating a substantial rise in the company's ability to pay off its short-term obligations solely with cash on hand.
- The upward trend in the cash ratio highlights the company's strengthening liquidity position and suggests a reduced reliance on non-cash current assets to meet short-term debt obligations.

Overall, the liquidity ratios of Dorian LPG Ltd demonstrate a favorable liquidity position and improving financial health, which may enhance investor confidence and signal the company's ability to navigate short-term financial challenges effectively.

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Additional liquidity measure

Dorian LPG Ltd's cash conversion cycle has shown fluctuations over the years. As of March 31, 2021, the company had a cash conversion cycle of 48.15 days, indicating the average number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. The cycle increased to 57.35 days by March 31, 2022, suggesting a potential lengthening of the time it takes for the company to convert its investments into cash.

However, there was a significant improvement in the cash conversion cycle by March 31, 2023, where it decreased to 38.49 days, implying a more efficient management of working capital during that period. This trend continued positively, as the cycle further reduced to 19.96 days by March 31, 2024, indicating a significant enhancement in the company's cash conversion efficiency.

By March 31, 2025, the cash conversion cycle reached an impressively low level of 1.40 days, signifying a very efficient management of working capital and a swift conversion of investments into cash. Overall, Dorian LPG Ltd has exhibited fluctuations in its cash conversion cycle over the years, with notable improvements in efficiency in more recent periods, which is a positive indicator of the company's financial management and operational effectiveness.