Permian Resources Corporation (PR)

Permian Resources Corporation's current ratio has shown fluctuation over the years, starting at a low of 0.31 on March 31, 2020, and reaching a peak of 1.11 on June 30, 2022. The current ratio measures the company's ability to cover its short-term liabilities with its current assets, with a ratio above 1 indicating the company has more current assets than liabilities. It appears that the company has gradually improved its ability to cover short-term obligations, with the ratio standing at 0.84 on December 31, 2024.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows variability. It started at a very low 0.02 on March 31, 2020, but increased significantly to 0.64 on June 30, 2022, before dropping back to 0.36 on December 31, 2024. This ratio suggests the company's ability to cover its short-term liabilities using more liquid assets, excluding inventory. Overall, the quick ratio indicates a better liquidity position compared to the current ratio.

The cash ratio, which is the most stringent measure of liquidity focusing only on cash and cash equivalents, mirrors the trends seen in the quick ratio. It started low at 0.02 on March 31, 2020, and peaked at 0.64 on June 30, 2022. The ratio stood at 0.36 on December 31, 2024, indicating the company may have enough cash to cover immediate liabilities.

In conclusion, Permian Resources Corporation has shown improvements in its liquidity position over the years, as evidenced by the increasing current ratio, quick ratio, and cash ratio. However, the fluctuations in these ratios suggest that the company's liquidity position has been somewhat volatile. It is important for the company to continue monitoring and managing its liquidity to ensure it can meet its short-term obligations effectively.

---

Additional liquidity measure

Permian Resources Corporation's cash conversion cycle indicates the efficiency of its working capital management over the period. The company's cash conversion cycle remained at zero days for most of 2020 and 2021, suggesting a quick turnover of cash within its operations. This indicates that Permian Resources Corporation efficiently converted its investments in inventory and receivables into cash during these periods.

However, the cash conversion cycle increased to 51.49 days by the end of December 2022, indicating a potential slowdown in the conversion of inventory and receivables into cash. This could be a cause for concern as it may suggest inefficiencies in managing working capital or delays in collecting receivables.

Subsequently, the cash conversion cycle improved significantly to 0.80 days by September 2023, indicating a swift turnaround in converting working capital back into cash. The cycle returned to zero days by the end of December 2023 and continued at this level until at least June 2024, suggesting effective management of working capital during these periods.

Overall, Permian Resources Corporation's cash conversion cycle has shown variations over the analyzed period, with periods of efficient working capital management and brief periods of potential inefficiencies. Monitoring and managing the cash conversion cycle effectively is essential for maintaining liquidity and optimizing financial performance.