Talos Energy (TALO)

Based on the data provided, Talos Energy's liquidity ratios have shown fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has generally been declining from 2020 to 2022, with values ranging from 0.40 to 0.80. From 2022 to 2024, there is some improvement, with the ratio peaking at 0.97 on September 30, 2024. Although the current ratio appears to have improved towards the end of the period, it is important to note that a ratio below 1 may indicate potential liquidity concerns.

The quick ratio, or acid-test ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. Talos Energy's quick ratio has been generally low throughout the years, with values ranging between 0.02 and 0.15. This indicates that the company may have difficulty meeting its short-term obligations without relying on inventory, which could be a cause for concern.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, follows a similar trend to the quick ratio, with values fluctuating between 0.02 and 0.15. This suggests that Talos Energy's ability to cover its short-term liabilities solely with cash is limited.

Overall, the liquidity ratios of Talos Energy suggest that the company may face challenges in meeting its short-term obligations, especially if there is a significant increase in immediate cash needs. Management should closely monitor and improve liquidity management practices to ensure the company's financial health and operational stability.

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Additional liquidity measure

The cash conversion cycle of Talos Energy has shown fluctuations over the years based on the provided data. It measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From March 31, 2020, to September 30, 2021, the cash conversion cycle remained relatively stable, ranging between approximately 5.83 days and 11.65 days. This indicates that Talos Energy efficiently managed its working capital during this period.

However, from March 31, 2022, to June 30, 2022, there was a significant increase in the cash conversion cycle from 11.40 days to 42.45 days. This suggests a potential liquidity issue or inefficiency in managing inventory or receivables during this period.

The cycle improved in the following quarters, indicating a corrective action taken by the company. From December 31, 2023, to December 31, 2024, the cash conversion cycle reduced to 0.00 days, which could indicate an aggressive management approach to convert investments into cash quickly.

Overall, fluctuations in the cash conversion cycle can provide insights into how effectively Talos Energy manages its working capital and liquidity, highlighting areas for improvement and areas of strength in its financial operations.