MP Materials Corp (MP)
Current ratio
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 1,031,320 | 1,131,180 | 1,293,830 | 1,276,810 | 561,047 |
| Total current liabilities | US$ in thousands | 164,019 | 108,550 | 97,481 | 59,543 | 43,061 |
| Current ratio | 6.29 | 10.42 | 13.27 | 21.44 | 13.03 |
December 31, 2024 calculation
Current ratio = Total current assets ÷ Total current liabilities
= $1,031,320K ÷ $164,019K
= 6.29
The current ratio of MP Materials Corp shows a varying trend over the past five years.
As of December 31, 2020, the current ratio was strong at 13.03, indicating that the company had more than enough current assets to cover its short-term liabilities. This high ratio suggests that MP Materials Corp was in a healthy financial position at that time.
The ratio increased significantly to 21.44 by December 31, 2021, indicating an even stronger ability to cover its short-term obligations. This substantial increase suggests that the company may have experienced significant improvements in managing its current assets and liabilities.
However, by December 31, 2022, the current ratio decreased to 13.27, although it still remained at a relatively healthy level. This slight decline may indicate a change in the company's liquidity position or a shift in its current asset composition.
The ratio further decreased to 10.42 by December 31, 2023, which may suggest that MP Materials Corp had a higher proportion of short-term liabilities in relation to its current assets at that point in time. This reduction could potentially raise concerns about the company's ability to meet its short-term financial obligations.
By December 31, 2024, the current ratio declined significantly to 6.29, signaling a potential liquidity challenge for MP Materials Corp. A current ratio below 1 would typically raise red flags regarding the company's liquidity and ability to meet its short-term liabilities.
In conclusion, while MP Materials Corp had a strong current ratio in the initial years, the ratio experienced fluctuations in the later years, with a notable decline by the end of the five-year period. This trend underscores the importance of continuously monitoring the company's liquidity position to ensure its financial health and stability.
Peer comparison
Dec 31, 2024