ProPetro Holding Corp (PUMP)

ProPetro Holding Corp's liquidity ratios show a declining trend over the years.

The current ratio decreased from 1.61 in 2020 to 0.02 in 2024, indicating a substantial decrease in the company's ability to cover its short-term obligations with its current assets. This decline could be a cause for concern as it may suggest potential liquidity issues in meeting its immediate debt obligations.

Similarly, the quick ratio and cash ratio also exhibited a decreasing trend from 2020 to 2024, reflecting a decline in the company's ability to meet its short-term liabilities using its most liquid assets. The quick ratio dropped from 0.66 in 2020 to 0.05 in 2024, and the cash ratio followed the same pattern, decreasing from 0.66 to 0.05 during the same period.

Overall, the deteriorating liquidity ratios suggest that ProPetro Holding Corp may face challenges in managing its short-term financial obligations efficiently. It is essential for the company to closely monitor its liquidity position and take appropriate actions to improve its short-term financial health to ensure its sustainability and stability in the future.

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Additional liquidity measure

The cash conversion cycle of ProPetro Holding Corp has shown fluctuations over the years. From December 31, 2020, to December 31, 2024, the cash conversion cycle increased gradually, indicating a lengthening period between the company's cash outflows and inflows.

The cycle was relatively short at 1.35 days in 2020 but increased to 7.37 days by the end of 2024. This lengthening cycle suggests that ProPetro may be taking longer to convert its investments in inventory and accounts receivable into cash.

The trend observed in the cash conversion cycle warrants further investigation to understand the underlying reasons for the increase and to assess its implications for the company's liquidity management and operating efficiency.