Magnolia Oil & Gas Corp (MGY)

Based on the data provided, we can analyze the liquidity ratios of Magnolia Oil & Gas Corp over the years:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- Magnolia Oil & Gas Corp's current ratio has shown an upward trend from 2.18 in 2020 to 2.50 in 2022, indicating an improvement in its short-term liquidity position.
- However, the current ratio decreased to 1.42 in 2024, which may raise concerns about the company's ability to meet its short-term obligations promptly.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Similar to the current ratio, the quick ratio of Magnolia Oil & Gas Corp increased from 2.13 in 2020 to 2.49 in 2022, reflecting a strong liquidity position.
- The quick ratio decreased to 1.41 in 2024, indicating a potential reduction in the company's ability to meet its short-term liabilities without relying on inventory.

3. Cash Ratio:
- The cash ratio focuses solely on the company's ability to cover its short-term liabilities with cash and cash equivalents.
- Magnolia Oil & Gas Corp's cash ratio has fluctuated over the years, reaching a peak of 1.98 in 2022 before declining to 0.90 in 2024.
- A decreasing cash ratio may suggest a lower level of liquidity and raise concerns about the company's cash position to meet immediate obligations.

In summary, Magnolia Oil & Gas Corp has generally maintained healthy liquidity ratios over the years, with improvements shown in 2022. However, the decreasing trend in these ratios in 2024 may indicate potential liquidity challenges that the company might face in meeting its short-term obligations. Further analysis of the company's cash management and working capital practices may be necessary to address these concerns.

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Additional liquidity measure

The cash conversion cycle of Magnolia Oil & Gas Corp has evolved significantly over the past five years. In December 2020, the company had a negative cash conversion cycle of -201.44 days, indicating that it was able to convert its investments in raw materials and production into cash quickly. However, by December 2022, the cash conversion cycle had substantially extended to -941.65 days, suggesting that the company took longer to convert its investments into cash during that period.

In the following years, there was some improvement in the cash conversion cycle, with December 2023 showing a decrease to -812.70 days and December 2024 further decreasing to -651.31 days. Although these figures remained negative, indicating efficient cash conversion, the trend suggests that the company made efforts to streamline its operations and manage its working capital more effectively.

Overall, while Magnolia Oil & Gas Corp experienced fluctuations in its cash conversion cycle over the period, the general trend towards lower negative values in the later years indicates a potential enhancement in the company's working capital management and operational efficiency.