SM Energy Co (SM)

The liquidity ratios of SM Energy Co have shown varying trends over the past five years.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets.
- SM Energy Co's current ratio has been improving steadily from 2019 to 2023, indicating a stronger ability to meet its short-term liabilities with current assets.
- An increase in the current ratio from 0.54 in 2019 to 1.45 in 2023 suggests an enhanced liquidity position and better financial health of the company.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Similar to the current ratio, SM Energy Co's quick ratio has shown an upward trend over the years, reflecting an improvement in the company's ability to cover its short-term obligations with its most liquid assets.
- The quick ratio has risen from 0.54 in 2019 to 1.45 in 2023, indicating a strengthening liquidity position and better financial stability.

3. Cash Ratio:
- The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents.
- SM Energy Co's cash ratio has demonstrated a notable increase from 2019 to 2023, reflecting an enhanced ability to meet its short-term obligations using only cash and cash equivalents.
- The substantial rise in the cash ratio from 0.14 in 2019 to 1.08 in 2023 suggests an improved liquidity position and a stronger financial position for the company.

In conclusion, SM Energy Co has shown significant improvement in its liquidity ratios over the past five years, indicating a better ability to meet its short-term obligations and suggesting an enhanced financial health and stability overall.

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Additional liquidity measure

The cash conversion cycle of SM Energy Co has shown varying trends over the past five years. In 2023, the company's cash conversion cycle increased to 35.54 days from 25.35 days in 2022. This indicates that it took the company longer to convert its investments in operations into cash during 2023.

Comparing 2023 to earlier years, the cash conversion cycle was relatively higher than in 2021, but lower than in 2020 and 2019. The decrease compared to 2020 and 2019 suggests an improvement in the efficiency of SM Energy Co in managing its cash flow and working capital during 2023.

Overall, the cash conversion cycle can provide insights into the efficiency of SM Energy Co in managing its operating cycle and liquidity. Further analysis considering other financial metrics and industry benchmarks would provide a more comprehensive view of the company's financial performance.