Marathon Digital Holdings Inc (MARA)

The liquidity ratios of Marathon Digital Holdings Inc have shown significant fluctuations over the past five years.

The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has ranged from as low as 0.81 in 2019 to as high as 198.34 in 2020. The current ratio has improved significantly in recent years, indicating that the company has more than enough current assets to cover its short-term obligations. However, the extremely high current ratio in 2020 might suggest inefficient use of assets or potential cash management issues.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has also shown a wide range of values, from 0.37 in 2019 to 151.22 in 2020. The trend suggests that the company has a strong ability to meet its short-term obligations even when inventory is excluded.

The cash ratio, which is the most stringent measure of liquidity, focuses solely on the company's ability to cover immediate liabilities with its cash and cash equivalents. Marathon Digital Holdings Inc has consistently maintained a healthy cash ratio over the years, ranging from 0.37 in 2019 to 29.53 in 2023. This indicates that the company has a significant amount of cash on hand relative to its immediate obligations.

Overall, Marathon Digital Holdings Inc has exhibited varying levels of liquidity over the past five years, with improvements in its ability to meet short-term obligations. The company's strong cash position is particularly noteworthy, reflecting a solid foundation for managing liquidity risks. However, the extremely high current ratio in 2020 may warrant further investigation into the company's asset management strategies.

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Additional liquidity measure

The cash conversion cycle of Marathon Digital Holdings Inc has fluctuated significantly over the past five years. In particular, the cycle was negative at -6.11 days as of December 31, 2023, indicating that the company is efficiently converting its inventory and receivables into cash.

This is a stark improvement compared to the previous year when the cycle was 8.79 days, suggesting better management of working capital and a shorter time taken to generate cash from its operations.

However, the company faced significant challenges in its cash conversion cycle in prior years, particularly on December 31, 2020, when the cycle was an astonishing 9,716.39 days. Such a prolonged cycle indicates the company took an exceptionally long time to convert its resources into cash, potentially affecting its liquidity and operational efficiency significantly.

Overall, the recent improvement in the cash conversion cycle of Marathon Digital Holdings Inc is a positive sign of better operational efficiency and management of working capital, but the company needs to continue monitoring and improving this metric to ensure sustained financial health and performance.