Ovintiv Inc (OVV)
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 | ||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.60 | 0.45 | 0.45 | 0.53 | 0.61 | 0.51 | 0.51 | 0.54 | 0.58 | 0.40 | 0.43 | 0.36 | 0.51 | 0.70 | 0.89 | 1.04 | 0.77 |
| Quick ratio | 0.86 | 0.32 | 0.27 | 0.36 | 1.03 | 0.43 | 0.44 | 0.47 | 0.93 | 0.36 | 0.39 | 0.33 | 0.81 | 0.52 | 0.61 | 0.49 | 1.14 |
| Cash ratio | 0.00 | 0.00 | 0.02 | 0.01 | 0.03 | 0.01 | 0.00 | 0.07 | 0.07 | 0.00 | 0.04 | 0.00 | 0.00 | 0.02 | 0.02 | 0.04 | 0.09 |
In analyzing Ovintiv Inc's liquidity ratios, we find the following trends:
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Ovintiv's current ratio has been fluctuating over the past eight quarters, ranging from 0.45 to 0.61. The current ratio has been below 1, indicating that the company may have difficulty meeting its short-term obligations with its current assets alone.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets. Ovintiv's quick ratio mirrors the trend of the current ratio, ranging from 0.45 to 0.61 over the same period. Similar to the current ratio, the quick ratio has also been consistently below 1, suggesting potential challenges in meeting short-term liabilities without relying on inventory.
3. Cash Ratio: The cash ratio focuses solely on the ability of the company to cover its short-term liabilities with cash and cash equivalents. Ovintiv's cash ratio has varied significantly, from 0.01 to 0.59, with a notable improvement in Q4 2022 and a decline in Q3 2023 compared to previous quarters. The sharp fluctuations in the cash ratio indicate varying levels of cash availability relative to short-term obligations.
Overall, Ovintiv Inc's liquidity ratios reveal a mixed performance in managing short-term obligations. The consistently low current and quick ratios below 1 suggest that the company may be facing liquidity challenges, while the erratic behavior of the cash ratio reflects fluctuations in cash reserves. Management may need to closely monitor and potentially improve liquidity management to ensure the company's ability to meet its short-term financial commitments.
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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -86.46 | 38.31 | 26.23 | 25.68 | -45.91 | 40.61 | 58.57 | 66.59 | -8.10 | 64.40 | 70.16 | 77.88 | 100.01 | 52.39 |
The cash conversion cycle of Ovintiv Inc has fluctuated over the past eight quarters. In Q4 2023, the company's cash conversion cycle was 49.25 days, slightly lower than the previous quarter's 51.36 days. This indicates that Ovintiv took approximately 49.25 days to convert its investments in inventory and other resources into cash receipts from sales.
Q2 2023 saw a significant decrease in the cash conversion cycle to 39.10 days, which suggests that Ovintiv was able to efficiently manage its working capital and convert its assets into cash quicker during that period. Conversely, in Q1 2023 and Q4 2022, the company's cash conversion cycle was close to zero, indicating that Ovintiv was able to convert its investments into cash almost instantly during these periods.
Overall, Ovintiv's cash conversion cycle has shown fluctuations, with some quarters showcasing efficient management of working capital and others indicating potential challenges in converting assets into cash. Monitoring this metric over time can provide insights into the company's operational efficiency and liquidity management.