MP Materials Corp (MP)
Liquidity ratios
| 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 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 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 | 0.35 | 1.75 | 1.03 |
| Quick ratio | 9.46 | 11.36 | 15.09 | 12.70 | 12.49 | 17.18 | 19.67 | 24.63 | 20.66 | 17.19 | 13.35 | 16.39 | 12.15 | 8.56 | 35.96 | 9.83 |
| Cash ratio | 9.19 | 11.18 | 14.89 | 12.45 | 12.13 | 16.91 | 19.11 | 23.91 | 19.81 | 16.67 | 13.26 | 16.20 | 12.07 | 8.56 | 35.96 | 9.83 |
MP Materials Corporation has demonstrated consistently strong liquidity ratios over the past eight quarters.
The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has remained comfortably above 10 throughout the period, indicating a strong capacity to meet short-term liabilities. Similarly, the quick ratio, also known as the acid-test ratio, measures the company's ability to pay off its current liabilities without relying on the sale of inventory. MP Materials Corporation's quick ratio has consistently been above 9, signaling a high level of liquidity.
Furthermore, the cash ratio, which is the most stringent measure of liquidity as it evaluates the company's ability to cover current liabilities with its cash and cash equivalents, has also been robust, consistently exceeding 9. This indicates that the company has a sufficient level of highly liquid assets to meet its short-term obligations without relying on inventory or receivables.
Overall, MP Materials Corporation's liquidity ratios suggest that the company is well-positioned to meet its short-term financial obligations and indicates strong financial health and effective management of liquidity.
Additional liquidity measure
| 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 445.89 | 379.80 | 337.48 | 314.26 | 222.86 | 314.33 | 239.88 | 238.46 | 230.87 | 129.06 | 104.03 | 129.67 | 114.57 |
MP Materials Corporation's cash conversion cycle has shown fluctuations over the past eight quarters.
In Q4 2023, the cash conversion cycle increased to 278.95 days from 321.41 days in Q3 2023. This indicates that the company takes approximately 278.95 days to convert its investment in inventory into cash receipts from customers.
Comparing Q4 2023 to Q1 2023, there was an increase from 260.23 days to 278.95 days, suggesting a longer period of time needed to convert inventory to cash in the most recent quarter.
It is worth noting that in Q4 2022, the cash conversion cycle was negative at -33.97 days, indicating that the company was able to convert inventory into cash before paying suppliers during that quarter.
Overall, the trend in the cash conversion cycle for MP Materials Corporation has been fluctuating, with Q3 2022 and Q4 2022 showing lower values compared to the most recent quarters. This analysis suggests that the company may need to focus on improving its inventory turnover and collection of receivables to shorten its cash conversion cycle in the future.