Phillips 66 (PSX)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.19 | 1.21 | 1.14 | 1.17 | 1.26 | 1.29 | 1.33 | 1.54 | 1.38 | 1.30 | 1.28 | 1.13 | 1.15 | 1.15 | 1.08 | 1.26 | 1.39 | 1.22 | 1.25 | 1.11 |
| Quick ratio | 0.12 | 0.10 | 0.13 | 0.09 | 0.21 | 0.20 | 0.20 | 0.47 | 0.41 | 0.21 | 0.16 | 0.19 | 0.25 | 1.22 | 1.08 | 1.29 | 1.70 | 1.45 | 0.19 | 0.12 |
| Cash ratio | 0.12 | 0.10 | 0.13 | 0.09 | 0.21 | 0.20 | 0.20 | 0.47 | 0.41 | 0.21 | 0.16 | 0.19 | 0.25 | 1.22 | 1.08 | 1.29 | 1.70 | 1.45 | 0.19 | 0.12 |
The current ratio of Phillips 66 has exhibited fluctuations over the years but generally remained above 1, indicating that the company has had sufficient current assets to cover its current liabilities. The ratio ranged from a low of 1.08 in June 2021 to a high of 1.54 in March 2023. However, by the end of December 2024, the current ratio stood at 1.19, suggesting a slight decline in short-term liquidity compared to the previous quarters.
On the other hand, the quick ratio of Phillips 66 shows a more volatile trend compared to the current ratio, with values ranging from 0.09 in March 2024 to 1.70 in December 2020. The quick ratio, which excludes inventory from current assets, reflects the company's ability to meet its short-term obligations without relying on selling inventory. Despite the fluctuations, the quick ratio generally remained above 1, indicating that Phillips 66 could cover its current liabilities with its most liquid assets.
The cash ratio, similar to the quick ratio, provides insight into a company's ability to cover its short-term liabilities using only its cash and cash equivalents. The cash ratio of Phillips 66 shows a pattern similar to the quick ratio, fluctuating between 0.09 and 1.70 over the observed periods. While the cash ratio is generally lower than the quick ratio due to excluding other current assets, it still reflects the company's ability to meet its immediate obligations with its cash reserves.
Overall, the liquidity ratios of Phillips 66 demonstrate that the company has maintained a relatively solid liquidity position, with current assets comfortably covering current liabilities. This suggests that the company has been able to meet its short-term financial obligations without significant liquidity constraints. However, monitoring these ratios closely is important to ensure continued financial stability and operational resilience.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 10.90 | 15.95 | 16.98 | 17.03 | 10.40 | 15.93 | 17.17 | 13.47 | 7.89 | 10.76 | 12.43 | 14.12 | 11.95 | 17.96 | 22.71 | 25.68 | 24.04 | 25.52 | 23.63 | 20.64 |
The cash conversion cycle measures how efficiently a company manages its cash inflows and outflows related to its operating cycle. Looking at the data provided for Phillips 66 from March 31, 2020, to December 31, 2024, we can observe fluctuations in the company's cash conversion cycle.
Initially, the company's cash conversion cycle stood at around 20-25 days, indicating that Phillips 66 managed its cash and working capital reasonably well during this period. However, from September 2021 to June 2022, there was a significant improvement in the cash conversion cycle, dropping to below 15 days. This suggests that the company was able to collect cash from its sales and convert inventory into sales efficiently during this time.
Subsequently, there were fluctuations in the cash conversion cycle, with periods where it increased slightly, indicating potential challenges in managing working capital effectively. However, by December 31, 2024, the cash conversion cycle decreased to around 10-15 days, demonstrating that Phillips 66 improved its cash management practices and operating efficiency during that period.
Overall, the trend in Phillips 66's cash conversion cycle shows variability, but generally, the company was able to reduce the time it takes to convert its investments in inventory and accounts receivable into cash, which is a positive sign for its cash flow management and operational effectiveness.