Magnolia Oil & Gas Corp (MGY)

The liquidity ratios of Magnolia Oil & Gas Corp have shown consistent improvement over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has steadily increased from 1.67 in 2019 to 1.88 in 2023. This indicates that the company has a higher level of current assets relative to its current liabilities, providing a better cushion for meeting its short-term obligations.

The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more conservative measure of liquidity. Similar to the current ratio, the quick ratio has shown improvement over the years, rising from 1.65 in 2019 to 1.88 in 2023. This suggests that the company has sufficient liquid assets to cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has also demonstrated a positive trend, increasing from 1.04 in 2019 to 1.27 in 2023. This indicates that Magnolia Oil & Gas Corp has a strong ability to cover its current obligations with cash on hand.

Overall, the improving liquidity ratios of Magnolia Oil & Gas Corp reflect a strengthening liquidity position and suggest that the company is well-positioned to meet its short-term financial obligations. It also indicates prudent management of working capital and financial resources to support ongoing operations and potential growth opportunities.

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Additional liquidity measure

The cash conversion cycle of Magnolia Oil & Gas Corp has shown fluctuations over the past five years. The company's cash conversion cycle was negative in all years, indicating that Magnolia Oil & Gas Corp is efficiently managing its working capital.

In 2023, the cash conversion cycle improved to -812.70 days compared to -941.65 days in 2022. This suggests that the company took fewer days to convert its investments in inventory and receivables into cash during 2023.

The significant improvement from -470.63 days in 2021 to -812.70 days in 2023 indicates a more efficient management of cash flows and working capital. Magnolia Oil & Gas Corp has been able to reduce the time it takes to convert its inventory and receivables into cash, leading to a negative cash conversion cycle.

Overall, the trend of declining cash conversion cycles over the years shows that Magnolia Oil & Gas Corp has been successful in managing its working capital efficiently and improving its cash flow conversion efficiency.