Matador Resources Company (MTDR)

Matador Resources Company's liquidity ratios have shown fluctuations over the years. In terms of the current ratio, which measures the company's ability to cover short-term liabilities with its current assets, there was a notable improvement from 2020 to 2022, with the ratio increasing from 0.90 to 1.86. However, in 2023 and 2024, the current ratio decreased to 1.04 and 0.93, respectively, although it remained above 1, indicating the company's ability to meet short-term obligations.

Looking at the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, Matador Resources Company experienced a similar trend. The quick ratio improved significantly from 2020 to 2022, increasing from 0.67 to 1.67. However, in the subsequent years, the quick ratio declined to 0.77 in 2023 and 0.68 in 2024, indicating a decrease in the company's ability to meet short-term obligations without relying on inventory.

Lastly, the cash ratio, which assesses the company's ability to cover its current liabilities using only cash and cash equivalents, showed mixed results for Matador Resources Company. While there was a substantial improvement from 2020 to 2022, with the cash ratio increasing from 0.20 to 0.88, it decreased significantly in 2023 and 2024 to 0.08 and 0.02, respectively. This indicates a potential weakening of the company's ability to cover short-term liabilities solely with cash reserves.

Overall, Matador Resources Company's liquidity ratios reflect some variability in its ability to meet short-term obligations. It is essential for the company to continue monitoring and managing its liquidity position to ensure financial stability and meet upcoming obligations.

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Additional liquidity measure

The cash conversion cycle of Matador Resources Company has displayed significant variations over the years. In December 2020, the company had a cash conversion cycle of 56.41 days, indicating that it took approximately 56.41 days for the company to convert its investments in inventory and accounts receivable into cash.

By December 2021, the cash conversion cycle had substantially improved to 2.20 days, suggesting that Matador Resources Company was able to convert its investments into cash much more efficiently within a shorter timeframe.

In December 2022, the cash conversion cycle further decreased to -19.22 days, which is an unusual figure. A negative cash conversion cycle implies that the company is receiving cash from customers before it needs to pay its suppliers, which can be beneficial for cash flow management.

However, by December 2023, the cash conversion cycle increased to 22.98 days, signifying that the company took slightly longer to convert its investments into cash compared to the previous year.

Notably, by December 2024, the cash conversion cycle had turned significantly negative to -58.42 days, indicating that Matador Resources Company continued to operate with a cash conversion cycle where it receives cash from customers before needing to pay suppliers, potentially showcasing strong working capital management practices.

Overall, the fluctuation in Matador Resources Company's cash conversion cycle over the years reflects changes in its operational efficiency and management of working capital, with a particularly noteworthy improvement in 2021 and a strong negative cycle in 2022 and 2024.