Marathon Petroleum Corp (MPC)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.59 | 1.76 | 1.70 | 1.81 | 1.80 |
| Quick ratio | 1.08 | 1.26 | 1.22 | 0.74 | 0.55 |
| Cash ratio | 0.51 | 0.59 | 0.61 | 0.37 | 0.09 |
The liquidity ratios of Marathon Petroleum Corp over the past five years indicate the company's ability to meet its short-term financial obligations.
The current ratio has gradually decreased from 1.81 in 2020 to 1.59 in 2023, but has generally been above 1, suggesting that the company has sufficient current assets to cover its current liabilities. However, the slight decreasing trend may indicate a need to manage current liabilities more effectively.
The quick ratio has also shown a downward trend from 1.32 in 2022 to 1.13 in 2023. Although it remains above 1, indicating the company's ability to meet its short-term obligations without relying on inventory, the decreasing trend warrants attention as it may indicate a potential liquidity risk.
The cash ratio has similarly decreased over the years, from 0.20 in 2020 to 0.56 in 2023. While the ratio is still relatively low, it shows an improvement in the company's ability to cover its current liabilities with cash alone, suggesting potential enhancements in cash management practices.
In conclusion, while Marathon Petroleum Corp's liquidity ratios generally indicate a healthy liquidity position, the decreasing trends in the quick ratio and cash ratio over the years suggest the importance of effective liquidity management to ensure the company's ongoing ability to meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 16.34 | 12.58 | 15.48 | 31.53 | 18.69 |
The cash conversion cycle of Marathon Petroleum Corp has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 15.78 days, which increased from the previous year's value of 11.99 days. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash during 2023.
Compared to 2021 where the cycle was 14.71 days, there was a slight increase in 2023. The significant improvement in the cash conversion cycle in 2022 (11.99 days) compared to 2021 might be due to the company becoming more efficient in managing its working capital.
In 2020, Marathon Petroleum Corp experienced a longer cash conversion cycle of 31.17 days, showing a considerable increase from the cycle of 18.58 days in 2019. This could suggest potential challenges in managing the company's liquidity and working capital in 2020.
Overall, the trend in Marathon Petroleum Corp's cash conversion cycle over the last five years indicates fluctuations, possibly influenced by varying levels of efficiency in managing inventory, accounts receivable, and accounts payable. Further analysis and comparison with industry benchmarks would be beneficial to understand the company's working capital management performance.