MP Materials Corp (MP)

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 6.29 6.93 6.90 10.29 10.42 12.25 16.15 13.50 13.27 18.15 20.39 25.53 21.44 17.74 13.80 16.99 13.03 1.12 1.27 0.05
Quick ratio 5.19 5.90 5.93 8.81 9.20 11.18 14.89 12.45 12.13 16.91 19.11 23.91 19.81 16.67 13.26 16.20 12.07 0.46 0.69 0.05
Cash ratio 5.19 5.90 5.93 8.81 9.20 11.18 14.89 12.45 12.13 16.91 19.11 23.91 19.81 16.67 13.26 16.20 12.07 0.46 0.69 0.05

The liquidity ratios of MP Materials Corp indicate its ability to meet short-term obligations and manage its current liabilities effectively.

1. Current Ratio:
- The current ratio of MP Materials Corp has shown fluctuations over the periods. It was very low at 0.05 as of March 31, 2020, but improved significantly to 25.53 as of March 31, 2022, before declining to 6.29 as of December 31, 2024. Generally, a current ratio above 1 indicates the company has more current assets than current liabilities to cover its short-term obligations.

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 MP Materials Corp has displayed fluctuations but generally shows improvements in liquidity from 2020 to 2022. However, the ratio decreased to 5.19 as of December 31, 2024, indicating a potential liquidity challenge.

3. Cash Ratio:
- The cash ratio focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents. The cash ratio trend for MP Materials Corp is similar to that of the quick ratio, showcasing improvements in liquidity up to 2022 before a decline in 2024, reaching 5.19 as of December 31, 2024.

Overall, while the liquidity ratios of MP Materials Corp have generally improved over the years, the significant decline observed in 2024 may warrant closer monitoring of the company's liquidity position and management of current assets to ensure the ability to meet short-term obligations remains strong in the future.

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 202.06 369.78 274.36 308.19 325.08 206.62 202.98 197.05 189.98 217.36 142.95 137.75 123.01 98.72 106.05 110.27 127.56 151.19 154.32 167.83

The cash conversion cycle of MP Materials Corp has shown fluctuation over the years, indicating changes in its cash management efficiency. The cycle represents the time it takes for the company to convert its investments in inventory into cash inflows from sales.

The trend reveals that in the earlier period, the cash conversion cycle decreased steadily from 167.83 days on March 31, 2020, to 106.05 days on June 30, 2021, indicating an improvement in efficiency. However, from September 30, 2021, to December 31, 2024, the cycle fluctuated widely, ranging from 98.72 days to 369.78 days, suggesting challenges in managing inventory, accounts receivable, and accounts payable effectively.

Notably, the cycle peaked at 369.78 days on September 30, 2024, indicating potentially prolonged periods between cash outflows for inventory and cash inflows from sales, which may lead to liquidity challenges. The company should aim to minimize the cash conversion cycle to ensure smoother cash flow operations and optimize its working capital management.