Permian Resources Corporation (PR)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.84 | 0.52 | 0.77 | 0.52 | 0.50 |
| Quick ratio | 0.36 | 0.06 | 0.10 | 0.06 | 0.04 |
| Cash ratio | 0.36 | 0.06 | 0.10 | 0.06 | 0.04 |
Permian Resources Corporation's liquidity ratios indicate the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio has shown a slight improvement over the years, from 0.50 in 2020 to 0.84 in 2024. Although the ratio is still below 1, indicating that the company may have difficulty in meeting its current liabilities, the upward trend suggests some improvement in liquidity position.
2. Quick Ratio: The quick ratio, which excludes inventory from current assets, has also shown a similar increasing trend from 0.04 in 2020 to 0.36 in 2024. This indicates that the company may have a better ability to meet its short-term obligations without relying on selling inventory.
3. Cash Ratio: The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has followed the same increasing trend as the quick ratio, indicating a stronger ability to meet immediate obligations solely from cash reserves.
Overall, while Permian Resources Corporation's liquidity ratios have shown improvement over the years, they still suggest a relatively weak liquidity position, as indicated by ratios consistently below 1. Management should continue to monitor and manage working capital effectively to ensure the company's liquidity remains stable.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 0.00 | 51.49 | 0.00 | 0.00 |
The cash conversion cycle for Permian Resources Corporation has shown fluctuations over the years. In 2020, 2021, 2023, and 2024, the company's cash conversion cycle was noted as 0.00 days, indicating that the company was able to efficiently convert its inventory and receivables into cash within the same operating cycle.
However, there was a notable increase in the cash conversion cycle to 51.49 days as of December 31, 2022. This suggests that Permian Resources Corporation took longer to convert its inventory and receivables into cash during that specific period, which could potentially indicate inefficiencies in managing its working capital.
It would be crucial for the company to investigate the reasons behind the sudden increase in the cash conversion cycle in 2022 and take necessary steps to optimize its working capital management in order to improve overall liquidity and operational efficiency.