Northern Oil & Gas Inc (NOG)

Northern Oil & Gas Inc's liquidity ratios show a mixed picture over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has fluctuated but generally improved from 0.69 in December 2020 to 0.92 in December 2024. This indicates that the company's current assets have increased relative to its current liabilities, which is a positive sign for short-term solvency.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown improvement over the period, albeit starting from a low base. The quick ratio has increased from 0.01 in December 2020 to 0.02 in December 2024. This implies that Northern Oil & Gas Inc may have become better positioned to meet its short-term obligations without relying on potentially illiquid inventory.

Lastly, the cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has similarly shown improvement over the years. The cash ratio increased from 0.01 in December 2020 to 0.02 in December 2024, suggesting that the company has gradually built up its cash reserves relative to its current liabilities.

Overall, while there have been fluctuations, Northern Oil & Gas Inc's liquidity ratios demonstrate an improving trend in its ability to meet short-term obligations and manage liquidity effectively.

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Additional liquidity measure

The cash conversion cycle of Northern Oil & Gas Inc has exhibited fluctuations over the years. As of December 31, 2020, the company had a cash conversion cycle of 61.30 days, indicating that it took approximately 61 days to convert its investments in inventory and accounts receivable into cash received from customers.

By December 31, 2021, the cash conversion cycle had improved significantly to 8.30 days, reflecting a more efficient cash management process. This suggests that the company was able to convert its resources into cash at a faster rate during this period.

However, by December 31, 2022, the cash conversion cycle increased to 24.11 days, showing a slight deterioration in the efficiency of the company's cash conversion process compared to the previous year.

Remarkably, as of December 31, 2023 and December 31, 2024, the cash conversion cycle dropped to 0.00 days, indicating that the company managed to convert its investments into cash almost instantaneously during these periods.

Overall, the trend in Northern Oil & Gas Inc's cash conversion cycle reflects fluctuations in the efficiency of its working capital management over the years, with a notable improvement in 2021 but subsequent fluctuations in the following years.