Marathon Digital Holdings Inc (MARA)

Based on the provided data, let's analyze Marathon Digital Holdings Inc liquidity ratios:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- The current ratio has declined from 198.34 in December 2020 to 4.94 in December 2024.
- A current ratio above 1 indicates that the company has more current assets than current liabilities to meet its short-term obligations.
- Marathon Digital Holdings Inc's current ratio has decreased significantly over the years, indicating a potential liquidity challenge in meeting short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets.
- The quick ratio has decreased from 151.22 in December 2020 to 4.09 in December 2024.
- A quick ratio above 1 suggests that the company can meet its short-term liabilities without relying on the sale of inventory.
- The declining trend in Marathon Digital Holdings Inc's quick ratio reflects a decreasing ability to cover immediate liabilities with its most liquid assets.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover current liabilities with cash and cash equivalents.
- The cash ratio has decreased from 99.44 in December 2020 to 4.12 in December 2024.
- A high cash ratio indicates a strong ability to cover short-term liabilities using cash on hand.
- The decreasing cash ratio of Marathon Digital Holdings Inc suggests a diminishing ability to repay its short-term obligations solely with cash reserves.

In conclusion, the liquidity ratios of Marathon Digital Holdings Inc have shown a significant decline over the years, signaling potential challenges in meeting short-term financial obligations. It is essential for the company to closely monitor its liquidity position and take necessary actions to improve its liquidity management for sustainable operations.

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Additional liquidity measure

The cash conversion cycle for Marathon Digital Holdings Inc has experienced significant improvement over the years. In 2020, the company's cash conversion cycle was 9,716.39 days, indicating a prolonged period for converting raw materials into cash. However, by the end of 2021, this metric significantly decreased to 132.02 days, signifying a more efficient management of cash flow and working capital.

As of December 31, 2022, the cash conversion cycle further decreased to 8.79 days, highlighting the company's ability to swiftly convert inventory into sales and subsequently into cash. By the end of 2023, the cycle reduced even further to 1.52 days, showcasing an enhanced efficiency in the company's cash management practices.

Remarkably, as of December 31, 2024, the cash conversion cycle turned negative at -3.05 days. A negative cash conversion cycle suggests that Marathon Digital Holdings Inc is able to collect cash from customers before paying its suppliers, enabling the company to operate with funds that it hasn't yet technically paid for.

Overall, the trend of decreasing cash conversion cycle indicates that Marathon Digital Holdings Inc has been progressively improving its cash management efficiency and working capital turnover, which can have positive implications for the company's liquidity and financial health in the future.