National Fuel Gas Company (NFG)

National Fuel Gas Company's liquidity ratios indicate the company's ability to meet its short-term obligations with current assets. The current ratio has been decreasing over the past five years, from 0.68 in 2020 to 0.32 in 2024. This downward trend raises concerns about the company's ability to cover its current liabilities with its current assets.

The quick ratio, also known as the acid-test ratio, measures the company's ability to pay off its short-term obligations without relying on inventory. National Fuel Gas Company's quick ratio has been fluctuating over the years but generally remains low, with a negative value in 2024 (-0.06). This suggests that the company may struggle to meet its immediate payment obligations without considering inventory.

The cash ratio measures the company's ability to pay off its current liabilities with its most liquid assets, cash, and cash equivalents. National Fuel Gas Company's cash ratio has also been inconsistent, with a significant decrease in 2024 (-0.05). A negative cash ratio indicates that the company does not have enough cash to cover its current liabilities.

Overall, National Fuel Gas Company's liquidity ratios reflect a concerning trend of declining ability to meet short-term obligations with current assets. Management may need to focus on improving liquidity by increasing cash reserves or adjusting current asset management strategies to ensure the company's financial health and stability in the future.

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Additional liquidity measure

The cash conversion cycle of National Fuel Gas Company has shown a fluctuating trend over the past five years. In the most recent year, as of September 30, 2024, the company achieved a negative cash conversion cycle of -38.21 days, indicating the company is able to efficiently convert its inventory into cash and collect accounts receivable faster than it pays its suppliers.

Comparing this to the prior years, we observe an improvement in the cash conversion cycle from -46.31 days in 2023 and -74.24 days in 2022. The company saw a significant decrease in the cash conversion cycle in 2021 at -105.58 days, suggesting a more efficient operational cycle in that year. However, in 2020, the company experienced a smaller negative cash conversion cycle of -52.06 days.

Overall, a negative cash conversion cycle signifies that National Fuel Gas Company is effectively managing its working capital and liquidity. The decreasing trend in the cycle over the years could indicate improvements in inventory management, accounts receivable collection, and payment to suppliers, ultimately leading to potentially stronger cash flows and financial performance.