Par Pacific Holdings Inc (PARR)

The liquidity ratios of Par Pacific Holdings Inc have shown varying trends over the past five years.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has improved steadily from 0.72 in 2020 to 1.30 in 2023. This indicates that the company's current assets have been increasing relative to its current liabilities, which is positive for its short-term financial health.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Par Pacific Holdings Inc's quick ratio has also improved over the years, from 0.23 in 2020 to 0.53 in 2023. This shows an increasing ability to meet short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its short-term liabilities with cash and cash equivalents alone. Although the cash ratio fluctuated over the years, it remained relatively stable within a range of 0.10 to 0.30. This indicates that the company has a consistent ability to cover its short-term obligations with readily available cash.

Overall, the improving trend in the current and quick ratios suggests better liquidity management by Par Pacific Holdings Inc. However, the cash ratio could be further analyzed to understand the company's reliance on cash to meet its short-term obligations. It is important for stakeholders to continue monitoring these liquidity ratios to ensure the company's ability to meet its financial commitments in the short term.

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Additional liquidity measure

The cash conversion cycle of Par Pacific Holdings Inc has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 57.33 days from 63.59 days in 2022, indicating an improvement in the efficiency of converting its investment in inventory and accounts receivable into cash. However, compared to 2021 and 2020, the cash conversion cycle remains relatively higher.

In 2021, the cash conversion cycle was 68.61 days, indicating that the company took longer to convert its investments in inventory and accounts receivable into cash compared to the previous years. The decrease in 2022 followed by a further improvement in 2023 suggests that the company may have implemented better inventory and receivables management practices.

The trend over the five-year period shows some variability in the cash conversion cycle, but overall, the company has been able to manage its working capital efficiently. An increasing cash conversion cycle can indicate inefficiencies in managing inventory or collecting receivables, while a decreasing cycle reflects improvements in working capital management. It is important for Par Pacific Holdings Inc to continue monitoring and optimizing its cash conversion cycle to ensure effective cash flow management and overall financial health.