Royal Gold Inc (RGLD)

Royal Gold Inc's liquidity ratios demonstrate a declining trend over the years, indicating potential challenges with the company's short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 8.31 in June 2020 to 3.23 in December 2024. This decline suggests a reduction in the company's ability to meet its immediate financial obligations using its current assets.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also experienced a decrease from 7.38 in June 2020 to 2.31 in December 2024. This indicates that Royal Gold Inc may face difficulty in meeting its short-term liabilities with its most liquid assets.

Moreover, the cash ratio, which focuses solely on the company's ability to cover its current liabilities with its cash and cash equivalents, exhibited a downward trend from 7.33 in June 2020 to 2.30 in December 2024. This diminishing cash ratio suggests a weakening ability to settle current obligations using cash reserves alone.

Overall, the declining trend in Royal Gold Inc's liquidity ratios raises concerns about its short-term financial strength and ability to meet immediate payment obligations. Investors and stakeholders may need to closely monitor the company's liquidity position and management's strategies to address these challenges.

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Additional liquidity measure

Royal Gold Inc's cash conversion cycle has shown fluctuations over the years based on the data provided.

As of June 30, 2020, the company had a cash conversion cycle of 30.83 days, which increased to 36.51 days by June 30, 2021. This suggests that the company took longer to convert its investments in raw materials into cash during that period.

By December 31, 2022, the cash conversion cycle improved significantly to 18.17 days, indicating a more efficient management of working capital and quicker conversion of inventory into cash. However, there was a negative cash conversion cycle of -3.02 days by December 31, 2023. This could be an indication that the company was able to collect revenue from sales before paying its suppliers and creditors.

By December 31, 2024, the cash conversion cycle increased slightly to 6.88 days, still reflecting a relatively efficient cycle for Royal Gold Inc.

Overall, fluctuations in the cash conversion cycle can provide insights into the company's efficiency in managing working capital, inventory turnover, and accounts receivable/payable. It is essential for Royal Gold Inc to monitor and manage its cash conversion cycle effectively to optimize its liquidity and operational performance.