Occidental Petroleum Corporation (OXY)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.92 | 1.15 | 1.23 | 1.07 | 1.15 |
| Quick ratio | 0.51 | 0.68 | 0.84 | 0.90 | 0.74 |
| Cash ratio | 0.16 | 0.13 | 0.33 | 0.64 | 0.24 |
Occidental Petroleum Corp.'s liquidity ratios indicate its ability to meet short-term obligations and cover immediate financial needs. The current ratio has been declining over the past five years, from 1.25 in 2019 to 0.92 in 2023. This downward trend suggests potential challenges in meeting short-term liabilities with current assets.
Similarly, the quick ratio has also decreased over the years, signaling a diminishing ability to cover immediate obligations without relying on inventory. The quick ratio decreased from 0.72 in 2019 to 0.69 in 2023.
Furthermore, the cash ratio, which provides the most conservative measure of liquidity, has fluctuated over the years but generally remained at a low level. The cash ratio was highest in 2021 at 0.49 and lowest in 2019 at 0.29.
Overall, Occidental Petroleum Corp.'s liquidity ratios indicate a declining trend in its ability to cover short-term obligations with its current assets. This may raise concerns about the company's liquidity position and its ability to navigate unforeseen financial challenges.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -78.72 | -110.67 | -119.88 | -59.36 | -66.40 |
The cash conversion cycle measures how efficiently a company manages its operating capital. A negative cash conversion cycle indicates that a company is able to collect cash from customers before paying its suppliers, which is generally a favorable situation.
For Occidental Petroleum Corp., we observe a consistent improvement in its cash conversion cycle over the past five years. The company has effectively managed its working capital and operational efficiency, as evidenced by the decreasing trend from -614.36 days in 2019 to -148.96 days in 2023. This indicates that Occidental Petroleum Corp. is converting raw materials and inventory into cash quickly, collecting payments from customers promptly, and managing its payables efficiently.
The significant improvement in the cash conversion cycle from 2019 to 2023 suggests that Occidental Petroleum Corp. has become more effective in managing its working capital, which could lead to improved liquidity and financial stability. This positive trend reflects positively on the company's operational efficiency and may indicate a well-managed supply chain and effective cash flow management practices.