Marathon Oil Corporation (MRO)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.40 | 0.72 | 1.11 | 1.33 | 1.22 |
| Quick ratio | 0.33 | 0.65 | 1.05 | 1.60 | 1.14 |
| Cash ratio | 0.04 | 0.15 | 0.35 | 0.98 | 0.50 |
Marathon Oil Corporation's liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 1.22 in 2019 to 0.40 in 2023, indicating a weakening liquidity position.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also declined from 1.18 in 2019 to 0.35 in 2023. This suggests that Marathon Oil may have difficulties meeting its short-term obligations without relying on inventory as a source of liquidity.
The cash ratio, which indicates the company's ability to cover its current liabilities solely with cash and cash equivalents, also experienced a significant decrease from 0.54 in 2019 to 0.06 in 2023. This may raise concerns about Marathon Oil's immediate liquidity position and ability to fulfill its short-term financial obligations.
Overall, the declining trend in Marathon Oil Corporation's liquidity ratios over the past five years indicates potential liquidity challenges that the company may face in meeting its short-term financial commitments. Investors and creditors should closely monitor these ratios to assess the company's ability to manage its liquidity effectively.
See also:
Marathon Oil Corporation Liquidity Ratios
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -1,134.90 | -1,276.69 | -644.68 | -212.58 | -784.65 |
The cash conversion cycle for Marathon Oil Corporation has shown a consistently negative trend over the past five years, indicating an efficient management of cash flows and working capital. The company has been able to convert its investments in inventory and accounts receivable into cash at a faster rate than its payables come due.
The significant improvement in the cash conversion cycle from -552.22 days in 2019 to -453.66 days in 2023 reflects the company's ability to enhance its operational efficiency and effectively manage its working capital. This reduction can be attributed to better inventory management, quicker collection of receivables, and strategic payment of payables.
The negative values signify that Marathon Oil Corporation is operating with a negative cash conversion cycle, which implies that the company is able to generate cash from its operating cycle before needing to pay its suppliers. This can provide the company with a competitive advantage by freeing up cash for other uses and potentially reducing the need for external financing.
Overall, the consistent improvement in Marathon Oil Corporation's cash conversion cycle indicates effective working capital management and operational efficiency, which bodes well for the company's financial health and liquidity position.