Southwestern Energy Company (SWN)

The liquidity ratios of Southwestern Energy Company indicate the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, shows a fluctuating trend over the past five years. The ratio has decreased from 0.80 in 2019 to 0.46 in 2021, before slightly improving to 0.82 in 2023. This indicates that the company may have faced challenges in liquidity management in 2020 and 2021 but has shown some improvement in recent years.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity as it excludes inventory from current assets. Similarly to the current ratio, the quick ratio has shown a fluctuating trend over the years, ranging from 0.46 in 2021 to 0.82 in 2023. This suggests a varying ability of the company to meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with cash and cash equivalents. Southwestern Energy Company's cash ratio has also varied over the years, with a low of 0.08 in 2021 and a significant improvement to 0.43 in 2023. This could indicate an enhancement in the company's cash position and liquidity management practices.

Overall, the liquidity ratios of Southwestern Energy Company reflect a mixed performance in managing short-term liquidity over the past five years, with some periods of weakness followed by improvements in recent years. It will be important for the company to continue monitoring and managing its liquidity levels effectively to ensure it can meet its financial obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle of Southwestern Energy Company has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 38.06 days, showing an increase from the previous year where it was 34.09 days. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash in 2023 compared to 2022.

Looking back further, the cash conversion cycle was notably higher in 2021 at 63.51 days and in 2020 at 58.20 days. The company managed to improve its cash conversion efficiency in 2022 compared to these two years. In 2019, the cash conversion cycle was 41.45 days, which was relatively lower than in 2021 and 2020.

Overall, the trend indicates some variability in how efficiently Southwestern Energy Company is managing its working capital and converting assets into cash. The company should aim to continuously monitor and potentially optimize its cash conversion cycle to enhance its liquidity and overall financial performance.