Vital Energy Inc. (VTLE)

The liquidity ratios of Vital Energy Inc. indicate the company's ability to meet its short-term obligations and cover immediate financial needs. The current ratio has shown a declining trend from 2019 to 2023, reflecting a decrease in the company's ability to cover its current liabilities with its current assets. As of December 31, 2023, the current ratio stands at 0.62, indicating that Vital Energy may face challenges in meeting its short-term obligations.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a declining trend over the years. As of December 31, 2023, the quick ratio is 0.53, which suggests that the company may have difficulty in quickly covering its current liabilities with its most liquid assets.

Furthermore, the cash ratio, which focuses solely on cash and cash equivalents relative to current liabilities, has also decreased over the years. As of December 31, 2023, the cash ratio is very low at 0.02, indicating a limited ability for Vital Energy to meet its short-term obligations solely with its cash reserves.

Overall, the declining trend in all three liquidity ratios signals potential liquidity challenges for Vital Energy Inc. and highlights the importance of improving cash management and working capital efficiency to ensure the company can meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle (CCC) of Vital Energy Inc. has shown some fluctuations over the past five years. In 2023, the company's CCC increased to 81.60 days from 53.71 days in 2022, indicating that the company took longer to convert its investments in inventory back to cash. This may suggest potential inefficiencies in inventory management or slower collection of receivables.

Compared to 2021, the CCC in 2023 increased by 2.33 days, which could be attributed to a combination of longer inventory holding periods and slower accounts receivable collection. In 2020, the CCC was at its lowest point in the past five years at 42.99 days, reflecting a more efficient cash conversion cycle during that period.

In 2019, the CCC was at 50.22 days, slightly lower than in 2023, indicating that Vital Energy Inc. has had more efficient working capital management in the past. Overall, the fluctuation in the CCC over the years suggests that the company may need to focus on improving its inventory turnover and receivables collection processes to enhance its working capital efficiency.