Magnolia Oil & Gas Corp (MGY)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.42 | 1.47 | 1.28 | 1.71 | 1.88 | 2.65 | 3.10 | 2.64 | 2.50 | 2.63 | 2.25 | 2.22 | 2.37 | 1.98 | 1.86 | 2.30 | 2.18 | 1.73 | 1.52 | 1.34 |
| Quick ratio | 1.41 | 1.46 | 1.27 | 1.70 | 1.88 | 2.65 | 3.09 | 2.63 | 2.49 | 2.62 | 2.25 | 2.20 | 2.36 | 1.97 | 1.84 | 2.27 | 2.13 | 1.86 | 1.47 | 1.31 |
| Cash ratio | 0.90 | 0.98 | 0.78 | 1.14 | 1.27 | 2.04 | 2.57 | 2.14 | 1.98 | 2.02 | 1.51 | 1.45 | 1.68 | 1.28 | 1.13 | 1.41 | 1.49 | 1.37 | 0.97 | 0.86 |
The current ratio of Magnolia Oil & Gas Corp has shown a generally increasing trend from March 31, 2020, to June 30, 2023, indicating an improving liquidity position. However, from September 30, 2023, to December 31, 2024, there was a decline in the current ratio. The ratio peaked at 3.10 on June 30, 2023, but decreased to 1.42 by December 31, 2024, suggesting potential challenges in meeting short-term obligations towards the end of the period.
The quick ratio, which is a more stringent measure of liquidity, followed a similar pattern as the current ratio. It increased up to June 30, 2023, reflecting strong liquidity, but it dropped significantly to 1.41 by December 31, 2024, indicating a reduced ability to meet current liabilities with the most liquid assets.
The cash ratio, representing the most conservative measure of liquidity, exhibited fluctuations over the period but generally maintained above 1, indicating the company's ability to cover current liabilities with cash and cash equivalents. However, a slight downward trend is noticeable towards the end of the period, with the ratio declining from 2.57 on June 30, 2023, to 0.90 by December 31, 2024, suggesting potential liquidity constraints.
Overall, the liquidity ratios of Magnolia Oil & Gas Corp show a mix of strengths and weaknesses in its ability to meet short-term obligations. Monitoring these ratios closely will be essential for evaluating the company's liquidity position and making informed financial decisions.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -651.30 | -604.16 | -863.38 | -877.44 | -812.70 | -798.71 | -736.30 | -854.07 | -941.65 | -1,013.97 | -919.65 | -535.28 | -468.13 | -353.34 | -269.52 | -232.49 | 43.50 | 24.34 | 17.82 | 15.72 |
The cash conversion cycle is a vital metric reflecting the efficiency of a company's working capital management. It measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.
Analyzing the cash conversion cycle data provided for Magnolia Oil & Gas Corp reveals fluctuations over time. Initially, the company's cash conversion cycle increased moderately from 15.72 days on March 31, 2020, to 43.50 days on December 31, 2020. This increase indicates a longer period required to convert resources into cash, potentially signaling inefficiencies in operations.
However, starting from March 31, 2021, there was a significant shift as the cash conversion cycle numbers turned negative, indicating a negative working capital cycle. Negative cash conversion cycle values suggest that the company is able to receive cash from sales before having to pay its suppliers. This could imply efficiently managing resources and timely collection of receivables.
The cash conversion cycle continued to exhibit negative values throughout the subsequent periods, reaching its lowest point on September 30, 2024, at -604.16 days. Such prolonged negative cash conversion cycle periods are unusual and may require further investigation to understand the underlying factors driving this trend.
In summary, the cash conversion cycle analysis suggests that Magnolia Oil & Gas Corp experienced a transition from a lengthier cycle to efficiently managing its working capital, as evident from the consistently negative values in recent periods. Further monitoring and evaluation are essential to ensure continued operational efficiency and effective working capital management.