Phillips 66 (PSX)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.26 | 1.38 | 1.15 | 1.39 | 1.24 |
| Quick ratio | 0.95 | 1.10 | 0.86 | 2.54 | 0.87 |
| Cash ratio | 0.21 | 0.41 | 0.25 | 1.70 | 0.14 |
The current ratio for Phillips 66 has fluctuated over the past five years, ranging from 1.15 to 1.39. This ratio indicates the company's ability to cover its short-term liabilities with its current assets. A current ratio above 1 suggests that the company has more current assets than current liabilities, which is generally seen as favorable. Despite some variability, the current ratio has generally remained above 1, reflecting Phillips 66's ability to meet its short-term obligations.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Phillips 66's quick ratio has varied from 0.88 to 1.17, indicating a somewhat weaker liquidity position compared to the current ratio. However, the company has maintained a quick ratio above 1 in most years, signaling that it can cover its short-term obligations without relying on inventory.
The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with cash and cash equivalents alone. Phillips 66's cash ratio has fluctuated between 0.18 and 0.48 over the past five years, indicating a varying ability to cover short-term obligations solely with cash. A cash ratio below 1 suggests that the company may need to rely on other current assets to meet its obligations, but Phillips 66 has generally shown a decent cash position.
Overall, Phillips 66 has demonstrated adequate liquidity levels over the years, as indicated by its current, quick, and cash ratios. While there have been fluctuations, the company has consistently maintained ratios above key thresholds, reflecting a strong ability to meet its short-term financial commitments.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 39.68 | 4.75 | 10.61 | 37.56 | 12.50 |
The cash conversion cycle of Phillips 66 has fluctuated over the past 5 years. In 2023, the company's cash conversion cycle increased to 8.67 days from 4.00 days in 2022. This indicates that it took longer for the company to convert its investments in inventory and receivables into cash during 2023.
Comparing to 2021, the cash conversion cycle increased significantly in 2023. The company managed its working capital less efficiently in 2023 compared to 2021 when the cycle was 6.34 days.
The cash conversion cycle in 2020 was substantially higher at 26.65 days. However, the company improved its efficiency in managing working capital in 2023 compared to 2020.
In 2019, the cash conversion cycle was 10.58 days, indicating that Phillips 66 was more efficient in converting its investments in inventory and receivables into cash in 2019 than in 2023.
Overall, it is essential for Phillips 66 to monitor and manage its cash conversion cycle effectively to ensure optimal working capital management and liquidity in the future.