Vital Energy Inc. (VTLE)

Based on the provided data for Vital Energy Inc.'s liquidity ratios, the company's current ratio, which measures its ability to cover short-term liabilities with current assets, has shown a declining trend over the past five years, decreasing from 0.69 in 2020 to 0.78 in 2024. Although the current ratio improved in the most recent year, it is still below 1, indicating that the company may have difficulty meeting its short-term obligations.

The quick ratio, which provides a more stringent assessment by excluding inventory from current assets, also showed a downward trend, falling from 0.63 in 2020 to 0.72 in 2024. This implies that Vital Energy Inc. may struggle to meet its immediate financial obligations without relying on selling inventory.

Furthermore, the cash ratio, which measures the company's ability to cover current liabilities with its cash and cash equivalents, deteriorated significantly over the five-year period, dropping from 0.25 in 2020 to 0.07 in 2024. This indicates that Vital Energy Inc. may have a limited ability to pay off its short-term liabilities solely with its cash reserves.

Overall, the liquidity ratios suggest that Vital Energy Inc. has encountered challenges in maintaining sufficient liquid assets to meet its short-term obligations, potentially signaling a need for the company to improve its cash management strategies or seek additional sources of liquidity to enhance its financial stability.

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Additional liquidity measure

The cash conversion cycle of Vital Energy Inc. has shown fluctuations over the past five years.

As of December 31, 2020, the company had a cash conversion cycle of 42.99 days, indicating a relatively efficient management of cash inflows and outflows.

However, by December 31, 2021, the cash conversion cycle had increased to 83.93 days, suggesting a delay in converting investments in inventory and receivables into cash.

In 2022, the cash conversion cycle improved to 53.71 days, reflecting a better handling of working capital components.

Subsequently, by the end of 2023, the cycle increased again to 81.60 days, possibly signaling challenges in managing cash flows effectively.

By December 31, 2024, the cash conversion cycle reached 86.17 days, indicating a prolonged period for the company to convert assets into cash, which may require attention to optimize working capital efficiency.

Overall, Vital Energy Inc. has experienced fluctuations in its cash conversion cycle in recent years, which could be a reflection of changes in operational efficiency and working capital management within the organization.