ProPetro Holding Corp (PUMP)
Liquidity ratios
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.15 | 1.28 | 1.26 | 1.21 | 1.16 | 1.18 | 1.34 | 1.46 | 1.44 | 1.27 | 1.38 | 1.37 | 1.61 | 1.63 | 1.89 | 1.67 | 1.61 | 1.38 | 1.29 | 1.49 |
| Quick ratio | 1.03 | 1.18 | 1.11 | 1.06 | 1.07 | 1.03 | 1.30 | 1.41 | 1.38 | 1.22 | 1.35 | 1.29 | 1.47 | 1.55 | 1.74 | 1.62 | 1.55 | 1.35 | 1.25 | 1.44 |
| Cash ratio | 0.15 | 0.23 | 0.20 | 0.11 | 0.31 | 0.20 | 0.36 | 0.41 | 0.64 | 0.44 | 0.46 | 0.43 | 0.66 | 0.56 | 0.63 | 0.64 | 0.64 | 0.38 | 0.11 | 0.26 |
ProPetro Holding Corp's liquidity ratios have shown fluctuation over the past few quarters.
Current Ratio: The current ratio measures the company's ability to pay short-term obligations with its current assets. ProPetro's current ratio has been somewhat volatile, ranging from 1.15 to 1.89 over the past five quarters. While the ratio generally indicates that the company has sufficient current assets to cover its current liabilities, a ratio below 1 may indicate potential liquidity issues.
Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventory from current assets. ProPetro's quick ratio has fluctuated between 1.03 and 1.74 over the same period, indicating the company's ability to meet short-term liabilities using only its most liquid assets.
Cash Ratio: The cash ratio measures the proportion of a company's current assets held in cash or cash equivalents. ProPetro's cash ratio has varied from 0.11 to 0.66 in recent quarters, reflecting the company's ability to cover its current liabilities solely with cash on hand.
Overall, ProPetro Holding Corp's liquidity ratios paint a mixed picture, showing some volatility but generally indicating that the company has maintained a reasonable level of liquidity to meet its short-term obligations. It would be important for stakeholders to monitor these ratios closely to ensure the company's ongoing ability to meet its financial commitments.
Additional liquidity measure
| 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 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 16.34 | 1.75 | -5.06 | 2.30 | -11.95 | -3.70 | -2.34 | 2.68 | 0.02 | 7.59 | 25.91 | 33.84 | 7.79 | -58.45 | -20.05 | -204.80 | -232.60 | -358.00 | -460.70 | -525.33 |
The cash conversion cycle for ProPetro Holding Corp has exhibited fluctuating trends over the periods provided. A positive cash conversion cycle indicates that the company takes longer to convert its investments in inventory into cash receipts from sales. Conversely, a negative cash conversion cycle implies that the company receives cash from sales before it needs to pay its suppliers, leading to a more efficient use of cash flow.
Analyzing the data, we observe that in the more recent periods (Dec 2020 - Dec 2023), the cash conversion cycle has generally been positive, suggesting that ProPetro has taken longer to convert inventory into cash. However, there are also instances of negative cycles, particularly in Jun 2020 and Mar 2020, where the company managed to collect cash from sales before having to pay suppliers.
The substantial negative cash conversion cycles in Dec 2019 to Mar 2020 indicate that ProPetro was very efficient in managing its cash flow during that time, suggesting improved working capital management. However, the extremely negative cycle values in those periods could raise concerns about potential issues with inventory management or aggressive accounts payable policies.
Overall, a detailed analysis of the individual components of the cash conversion cycle, including days inventory outstanding, days sales outstanding, and days payables outstanding, would provide better insights into ProPetro's operational efficiency and liquidity management. Further investigation into the reasons behind the significant fluctuations in the cash conversion cycle could help identify any underlying issues or improvements in the company's cash flow management strategies.