Texas Pacific Land Trust (TPL)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 10.81 | 19.43 | 16.00 | 10.34 | 15.56 |
| Quick ratio | 7.94 | 18.22 | 12.90 | 8.41 | 13.15 |
| Cash ratio | 7.94 | 18.22 | 12.90 | 8.41 | 13.15 |
The Texas Pacific Land Trust's liquidity ratios indicate its ability to meet short-term obligations.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a strong trend over the years, improving from 15.56 in 2020 to 19.43 in 2023 before slightly declining to 10.81 in 2024. A current ratio above 1 indicates that the company has more current assets than current liabilities, with higher ratios suggesting better liquidity. Despite the slight decrease in 2024, the current ratio remained well above 1, reflecting a healthy liquidity position.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. The trend in the quick ratio mirrors that of the current ratio, displaying a significant improvement from 13.15 in 2020 to 18.22 in 2023 before dropping to 7.94 in 2024. A quick ratio above 1 indicates that the company can cover its current liabilities without relying on the sale of inventory. Although the quick ratio decreased in 2024, it still remained above 1, indicating strong liquidity.
The cash ratio, which is the most conservative liquidity ratio, assesses a company's ability to cover its current liabilities with only cash and cash equivalents. The cash ratio remained consistent at 13.15 in 2020, 8.41 in 2021, and 12.90 in 2022 before increasing to 18.22 in 2023 and then decreasing to 7.94 in 2024. While the cash ratio dropped in 2024, it still surpassed 1, implying that the company could settle its short-term obligations using only its cash holdings.
In summary, Texas Pacific Land Trust exhibits a strong liquidity position based on its current, quick, and cash ratios. Despite some fluctuations, the company maintains a healthy ability to meet its short-term obligations with its current assets and cash reserves.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 21.28 | 554.48 | 612.22 | 705.44 |
The cash conversion cycle of Texas Pacific Land Trust has shown a significant improvement over the years. In December 2020, the cash conversion cycle was 705.44 days, indicating a long period between the company's payment for inventory and the receipt of cash from its sales. By December 2024, the cash conversion cycle had decreased to 0.00 days, suggesting that the company has streamlined its processes and is now able to quickly convert its investments in inventory back into cash. This improvement reflects efficient management of inventory, accounts receivable, and accounts payable, resulting in enhanced liquidity and potential for increased profitability.