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.
Peer comparison
Dec 31, 2023