Murphy Oil Corporation (MUR)

Murphy Oil Corporation's liquidity position, as reflected by its current ratio, has shown fluctuations over the years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.40 in 2020 to 0.76 in 2021 but gradually improved to 0.89 in 2023 before slightly dropping to 0.83 in 2024.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also displayed varying trends. It was relatively low at 0.43 in 2020 and 0.45 in 2021, then dipped to 0.39 in 2022 and 0.37 in 2023 before reverting to 0.45 in 2024.

Moreover, the cash ratio, representing the proportion of current liabilities that can be covered by cash and cash equivalents, mirrored the quick ratio's pattern. It was consistent at 0.43 in 2020 and 0.45 in 2021, dropped to 0.39 in 2022 and 0.37 in 2023, and recovered to 0.45 in 2024.

Overall, while the current, quick, and cash ratios have fluctuated, Murphy Oil Corporation has generally shown the ability to meet its short-term obligations with its current assets, albeit with some variability in the levels of liquidity across the years.

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Additional liquidity measure

The cash conversion cycle for Murphy Oil Corporation has shown fluctuations over the past five years. In December 2020, the company's cash conversion cycle was 13.71 days, and it decreased to 13.00 days by the end of 2021. Subsequently, in 2022, the cycle improved further to 10.81 days indicating efficient management of working capital.

However, there was a significant increase in the cash conversion cycle in 2023, reaching 24.02 days, which suggests a potential delay in converting inventory and receivables into cash. This spike may have been due to operational challenges or changes in the company's industry environment.

Fortunately, by the end of 2024, Murphy Oil Corporation managed to decrease its cash conversion cycle to 9.93 days, showcasing a swift improvement in its cash management efficiency. Overall, fluctuations in the cash conversion cycle highlight the company's ability to adapt to changing business conditions and optimize its working capital processes.