Murphy USA Inc (MUSA)

Murphy USA Inc's liquidity ratios have exhibited fluctuating trends over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been on a downward trajectory, from 1.41 in 2019 to 0.95 in 2023. This indicates a potential weakening in the company's short-term liquidity position.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a decreasing trend over the same period, falling from 0.96 in 2019 to 0.56 in 2023. This suggests that the company may have difficulty meeting its immediate financial obligations without relying on inventory.

Furthermore, the cash ratio, which specifically assesses the company's ability to cover its current liabilities with its cash and cash equivalents, has experienced a decline from 0.61 in 2019 to 0.17 in 2023. This indicates a decrease in the company's ability to pay off its short-term debts using its readily available cash resources.

Overall, Murphy USA Inc's liquidity ratios reflect a potential liquidity challenge, as indicated by the declining current ratio, quick ratio, and cash ratio over the past five years. It may be crucial for the company to closely monitor its liquidity position and implement strategies to enhance its short-term financial stability.

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Additional liquidity measure

The cash conversion cycle measures how efficiently a company manages its working capital by analyzing the time it takes to convert its resources, such as inventory and accounts receivable, into cash flow. In the case of Murphy USA Inc, the trend in its cash conversion cycle over the past five years shows fluctuations.

In 2023, Murphy USA Inc had a cash conversion cycle of 2.31 days, representing an increase compared to the previous year. This suggests that the company took longer to convert its resources into cash during the year. However, it is still relatively low compared to the levels seen in 2020 and 2019.

In 2022, the company experienced a significantly low cash conversion cycle of 0.42 days, indicating that Murphy USA Inc efficiently managed its working capital and quickly converted its resources into cash. This was a significant improvement from the previous year when the cycle was much longer at 1.76 days.

In contrast, in 2020, the cash conversion cycle was relatively high at 6.14 days, indicating that the company faced challenges in efficiently managing its working capital during that year. However, Murphy USA Inc managed to reduce this cycle significantly in 2021 to 1.76 days, showcasing improvements in its cash conversion efficiency.

Overall, the fluctuations in Murphy USA Inc's cash conversion cycle over the past five years suggest varying levels of efficiency in managing working capital. It is essential for the company to monitor and potentially improve this metric to ensure optimal cash flow and operational efficiency in the future.