ProPetro Holding Corp (PUMP)

ProPetro Holding Corp's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, have shown a declining trend over the past five years. The current ratio has decreased from 1.61 in 2019 to 1.15 in 2023, indicating a potential weakening in the company's ability to cover its short-term obligations with its current assets.

Similarly, the quick ratio has also decreased from 1.55 in 2019 to 1.03 in 2023, suggesting a reduction in the company's ability to meet its short-term obligations without relying on inventory. This may raise concerns about ProPetro's ability to address immediate financial needs.

Moreover, the cash ratio has experienced a significant drop from 0.64 in 2019 to 0.15 in 2023, indicating a substantial decrease in the company's ability to cover its short-term liabilities with cash alone. This could potentially signal liquidity challenges or a decrease in the company's cash reserves.

Overall, the declining trend in ProPetro Holding Corp's liquidity ratios over the past five years warrants further investigation into the company's financial health and its ability to meet its short-term obligations. Investors and stakeholders may need to closely monitor the company's liquidity position and assess the effectiveness of its cash management strategies.

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Additional liquidity measure

The cash conversion cycle of ProPetro Holding Corp has shown variability over the past five years. In 2023, the company's cash conversion cycle was 16.53 days, indicating that it takes approximately 16.53 days for the company to convert its investments in inventory and other resources into cash inflows from sales.

In 2022 and 2021, the company reported negative cash conversion cycles of -9.24 days and -8.38 days, respectively. This suggests that in these years, ProPetro Holding Corp was able to collect cash from its sales before paying for its inventory and operating expenses, which is a favorable position indicating efficient working capital management.

In 2020, the cash conversion cycle increased to 6.78 days from the negative figures of the previous years, indicating a longer duration for the company to convert investments in inventory into cash. However, the positive figure is still relatively low, signaling efficiency in managing working capital.

In contrast, in 2019, ProPetro Holding Corp reported a significantly negative cash conversion cycle of -232.93 days, which may have been influenced by extended payment terms with suppliers or efficient collections from customers.

Overall, the trend in the cash conversion cycle of ProPetro Holding Corp shows fluctuations but generally indicates efficient management of working capital, particularly in 2022 and 2021 when the company had negative cash conversion cycles.