SM Energy Co (SM)

Quick ratio

		Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Cash	US$ in thousands	616,164	444,998	332,716	10	10
Short-term investments	US$ in thousands	—	—	—	—	—
Receivables	US$ in thousands	231,165	233,297	247,201	162,455	184,732
Total current liabilities	US$ in thousands	633,812	598,584	889,327	583,739	472,043
Quick ratio		1.34	1.13	0.65	0.28	0.39

December 31, 2023 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($616,164K + $—K + $231,165K) ÷ $633,812K
= 1.34

The quick ratio of SM Energy Co has demonstrated variability over the past five years. It increased from 0.54 in 2019 to 1.45 in 2023, indicating an improvement in the company's ability to meet its short-term obligations with its most liquid assets. This upward trend suggests that SM Energy Co has strengthened its liquidity position and may be better equipped to cover its current liabilities without relying heavily on inventory.

The quick ratio was lowest in 2020 at 0.35, which might have raised concerns about the company's short-term financial health and ability to fulfill its immediate payment obligations. However, the quick ratio steadily increased in the following years, reflecting a positive trajectory in managing short-term liquidity risk.

The quick ratio exceeding 1 in 2022 and 2023 indicates that SM Energy Co had more than enough liquid assets to cover its current liabilities without relying on inventory, implying a strong liquidity position. Overall, the consistent improvement in the quick ratio over the years suggests that the company has enhanced its ability to meet its short-term financial obligations efficiently.