Murphy Oil Corporation (MUR)
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 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.89 | 0.99 | 0.84 | 0.78 | 0.77 | 0.78 | 0.66 | 0.60 | 0.76 | 0.73 | 0.72 | 0.80 | 1.40 | 1.20 | 1.14 | 1.40 | 1.03 | 1.23 | 1.25 | 1.61 |
| Quick ratio | 0.78 | 0.88 | 0.75 | 0.69 | 0.70 | 0.70 | 0.59 | 0.53 | 0.67 | 0.61 | 0.62 | 0.59 | 0.80 | 0.82 | 0.77 | 1.16 | 0.78 | 0.96 | 0.34 | 0.39 |
| Cash ratio | 0.37 | 0.37 | 0.36 | 0.30 | 0.39 | 0.38 | 0.27 | 0.30 | 0.45 | 0.45 | 0.33 | 0.27 | 0.43 | 0.36 | 0.22 | 0.47 | 0.33 | 0.47 | 0.15 | 0.17 |
The current ratio of Murphy Oil Corp., which measures the company's ability to pay off its short-term liabilities with its current assets, has shown some fluctuations over the past eight quarters. In the most recent quarter (Q4 2023), the current ratio decreased to 0.89 from 0.99 in the previous quarter, indicating a slight weakening of liquidity position. While the ratio has generally remained below 1, suggesting potential liquidity concerns, it has shown some improvement compared to the same quarter in the previous year.
The quick ratio, reflecting the company's ability to meet immediate short-term obligations without relying on inventory, cash, and receivables, has followed a similar trend to the current ratio. Murphy Oil Corp.'s quick ratio decreased to 0.82 in Q4 2023 from 0.93 in Q3 2023, pointing to a reduction in liquidity levels. Like the current ratio, the quick ratio has consistently been below 1, signaling limited ability to cover short-term liabilities with its most liquid assets.
The cash ratio, which provides a measure of the company's ability to cover its short-term obligations with cash and cash equivalents, has also displayed fluctuations. In Q4 2023, Murphy Oil Corp.'s cash ratio decreased to 0.42 from 0.41 in the previous quarter, showing a slight decline in liquidity. Similar to the current and quick ratios, the cash ratio has been below 1, indicating potential liquidity challenges.
Overall, Murphy Oil Corp.'s liquidity ratios suggest a somewhat constrained liquidity position, with ratios consistently below 1 in the past eight quarters. It is important for the company to closely monitor its liquidity management and working capital practices to ensure it can meet its short-term obligations effectively.
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 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -624.99 | -498.34 | -602.70 | -456.16 | -467.03 | -607.46 | -1,278.92 | -1,684.81 | -614.15 | -558.92 | -363.18 | -195.14 | -37.89 | -10.95 | -35.62 | -73.98 | -553.48 | -341.81 | -250.96 | -136.30 |
The cash conversion cycle of Murphy Oil Corp. has displayed significant volatility over the past eight quarters. It is evident that the company has been experiencing negative cash conversion cycles, indicating efficient management of its working capital. However, the magnitude of the negative days varies widely, ranging from -935.49 days to as extreme as -9,492.15 days.
The negative cash conversion cycle implies that Murphy Oil Corp. is able to convert its investments in inventory and accounts receivable into cash much faster than it pays its accounts payable, resulting in a net positive cash flow from its operating activities. This is generally considered a favorable situation as it reflects strong liquidity and operating efficiency.
The sharp fluctuations observed in the cash conversion cycle over the quarters could be attributed to seasonal variations in business activities, changes in sales volume, payment terms with suppliers, or inventory management practices. It is essential for the company to monitor and manage its working capital effectively to ensure a sustainable and stable cash conversion cycle in the long run.