Dorian LPG Ltd (LPG)

Dorian LPG Ltd's liquidity ratios provide insights into the company's ability to meet its short-term obligations.

The current ratio, a measure of short-term liquidity, indicates the company's ability to cover its current liabilities with its current assets. Over the period from June 30, 2020, to March 31, 2025, Dorian LPG Ltd's current ratio fluctuated, reaching a high of 4.60 on June 30, 2024, and a low of 1.52 on September 30, 2021. By the end of the period, the current ratio stood at 3.54 on March 31, 2025. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities, showing a favorable liquidity position.

The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Dorian LPG Ltd's quick ratio followed a similar trend to the current ratio over the same period. The quick ratio ranged from a low of 1.38 on September 30, 2021, to a peak of 4.39 on June 30, 2024. It closed at 2.95 on March 31, 2025. A quick ratio above 1 implies that the company can settle its current liabilities without relying on the sale of inventory.

The cash ratio, the most conservative liquidity measure, considers only the most liquid assets such as cash and equivalents in relation to current liabilities. Dorian LPG Ltd's cash ratio ranged from 0.89 on June 30, 2021, to 3.60 on June 30, 2024, showing fluctuations in the company's cash position over the period. As of March 31, 2025, the cash ratio stood at 2.94. A cash ratio above 1 suggests that the company can cover its current liabilities with cash and equivalents.

In conclusion, Dorian LPG Ltd's liquidity ratios have shown variability over the years, with some fluctuations in the company's ability to meet short-term obligations. However, the overall trend indicates a healthy liquidity position, with the company generally maintaining current, quick, and cash ratios above 1, demonstrating its ability to meet short-term financial commitments.

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Additional liquidity measure

The Cash Conversion Cycle (CCC) of Dorian LPG Ltd has shown some fluctuations over the periods under review. The CCC represents the amount of time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. From June 30, 2020, to September 30, 2020, the CCC increased from 28.94 days to 43.28 days, indicating a longer time taken to convert resources into cash.

There was a significant increase in the CCC from December 31, 2020, to March 31, 2021, reaching 68.89 days. However, the CCC decreased sharply to 26.35 days by June 30, 2021, reflecting an improvement in the company's efficiency in managing its working capital.

Subsequently, the CCC fluctuated over the next few quarters, with periods of increase and decrease. Notably, on September 30, 2024, and March 31, 2025, the CCC showed negative values (-13.46 days and -15.04 days, respectively), implying that the company was able to convert its resources into cash more quickly than previous periods. This could indicate improved inventory management or faster collection of receivables during those quarters.

Overall, a lower CCC indicates that Dorian LPG Ltd is more efficient in managing its working capital, while a higher CCC may signal potential liquidity and operational challenges. Therefore, monitoring the CCC trend is crucial for assessing the company's operational efficiency and liquidity management.