Ovintiv Inc (OVV)

Based on the provided liquidity ratios for Ovintiv Inc, we observe a consistent declining trend in both the current ratio and quick ratio over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has decreased from 0.77 in 2019 to 0.60 in 2023. Similarly, the quick ratio, which excludes inventory from current assets, has also experienced a decline from 0.77 in 2019 to 0.60 in 2023.

These trends indicate potential challenges in Ovintiv's short-term liquidity position and ability to cover its immediate financial obligations efficiently. A current ratio and quick ratio below 1 may suggest that the company's current liabilities exceed its current assets, which could lead to difficulties in meeting short-term debt obligations.

Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has shown fluctuations over the years. Notably, the significant decline in 2023 to 0.08 from 0.65 in 2019 signifies a reduced ability to cover short-term obligations solely with available cash.

In conclusion, the declining trend in liquidity ratios for Ovintiv Inc raises concerns about the company's short-term liquidity position. It suggests a need for the company to potentially improve its management of current assets and liabilities to ensure sufficient liquidity to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Ovintiv Inc has shown significant fluctuations over the past five years. In 2023, the company's cash conversion cycle was 49.25 days, indicating that it takes approximately 49 days for Ovintiv to convert its investments in inventory and other resources back into cash. This represents a substantial increase from the 1.27 days in 2022, suggesting a slower conversion process.

The cash conversion cycle was relatively low in 2022 compared to other years, indicating that Ovintiv was efficient in managing its cash flow and inventory turnover. However, in 2023, the cycle increased significantly, which may raise concerns about the company's liquidity and working capital management.

In 2021, the cash conversion cycle was 4.12 days, showing a swift conversion of resources into cash, reflecting effective inventory management and sales collection processes. The cycle then spiked to 69.10 days in 2020, indicating a prolonged cash conversion process, potentially due to slower sales, inefficient inventory management, or extended credit terms.

In 2019, the cash conversion cycle was 16.24 days, suggesting a relatively efficient cash conversion process compared to the following years. Overall, fluctuations in Ovintiv's cash conversion cycle highlight the company's varying efficiency in managing liquidity, inventory levels, and accounts receivable turnover over the years.