Expand Energy Corp. (NASDAQ:EXE)

Current ratio

The current ratio increased from 0.86 as of December 31, 2021, to 1.00 in 2022, showing an improvement in short-term liquidity. This upward trend continued significantly into 2023, reaching 1.99, which indicates the company had almost twice as many current assets as current liabilities, enhancing its ability to cover short-term obligations. However, in 2024, the current ratio sharply declined to 0.64, suggesting a reduced liquidity position and potential challenges in meeting short-term liabilities.

Quick ratio

The quick ratio exhibited more volatility over the analyzed period. Starting at 0.83 in 2021, it decreased to 0.60 in 2022, which may indicate a reduced ability to meet immediate liabilities without relying on inventory sales. The ratio then improved markedly to 1.33 in 2023, indicating a stronger buffer of liquid assets. Nevertheless, in 2024, it again declined significantly to 0.52, pointing to weakening liquidity excluding inventory assets.

Cash ratio

The cash ratio showed widely fluctuating values throughout the four years. It started at 0.37 in 2021, dropped substantially to 0.07 in 2022, signaling a drastic decrease in available cash or cash equivalents to cover current liabilities. There was a strong recovery in 2023 to 0.88, indicating a substantial increase in cash reserves relative to current liabilities. Despite this, the ratio fell again to 0.13 in 2024, reflecting a significant reduction in cash liquidity.

The current ratio exhibited considerable fluctuation over the four-year period. Initially, the ratio was below one, indicating potential short-term liquidity concerns, but subsequently improved significantly before declining again.

Current Ratio Trend

In 2021, the current ratio stood at 0.86. This suggests that Expand Energy Corp. had 86 cents of current assets for every dollar of current liabilities, potentially signaling a limited ability to meet its short-term obligations. The ratio increased to 1.00 in 2022, representing a stabilization of the short-term liquidity position. A substantial improvement was then observed in 2023, with the current ratio reaching 1.99, indicating a strong ability to cover short-term liabilities with current assets. However, this positive trend reversed in 2024, as the current ratio decreased to 0.64, returning to a level below one and again raising concerns about short-term liquidity.

Underlying Asset and Liability Movements

The initial low ratio in 2021 was driven by current liabilities exceeding current assets. While both current assets and current liabilities increased in 2022, the increase in assets was slightly less than the increase in liabilities, resulting in a ratio of 1.00. The significant improvement in 2023 was primarily due to a substantial decrease in current liabilities, while current assets experienced a modest decline. The subsequent decline in 2024 was caused by a more pronounced decrease in current assets coupled with a notable increase in current liabilities.

Implications

The volatility in the current ratio suggests potential instability in the company’s short-term financial management. The decline in 2024 warrants further investigation to determine the underlying causes and potential impact on the company’s ability to meet its short-term obligations. The large swing from 1.99 in 2023 to 0.64 in 2024 is particularly noteworthy and requires detailed scrutiny.

Total quick assets

The value of total quick assets decreased from US$ 2,029 million in 2021 to US$ 1,630 million in 2022, marking a significant decline. There was a slight recovery in 2023, with an increase to US$ 1,746 million. However, in 2024, the value fell again to US$ 1,621 million, indicating overall volatility and a downward trend over the four-year period.

Current liabilities

Current liabilities showed an overall upward trend with fluctuations. Starting at US$ 2,447 million in 2021, they increased to US$ 2,704 million in 2022. In 2023, there was a substantial decline to US$ 1,314 million, followed by a sharp increase to US$ 3,123 million in 2024. This pattern reveals significant variability and an overall increasing burden in the most recent year.

Quick ratio

The quick ratio demonstrated instability across the periods. It was below 1.0 in 2021 (0.83) and dropped further to 0.6 in 2022, suggesting a weaker short-term liquidity position during these years. In 2023, the ratio improved notably to 1.33, indicating sufficient quick assets to cover current liabilities. Nevertheless, in 2024, the ratio plunged to 0.52, reflecting a marked deterioration in the company’s liquidity and less capacity to meet short-term obligations with quick assets.

The data reveals notable fluctuations in the company's liquidity position over the observed four-year period.

Total Cash Assets

There is significant variability in total cash assets, starting at 914 million US dollars at the end of 2021, sharply declining to 192 million in 2022, then increasing substantially to 1,153 million in 2023, followed by a decrease to 395 million in 2024. This pattern suggests irregular cash management or cash flow events influencing available cash reserves.

Current Liabilities

The current liabilities exhibit a general upward trend except for 2023. Liabilities rose from 2,447 million in 2021 to 2,704 million in 2022, then decreased to 1,314 million in 2023 before increasing again sharply to 3,123 million in 2024. This volatility might reflect operational fluctuations or changes in short-term obligations.

Cash Ratio

The cash ratio, representing the company's ability to cover current liabilities with cash and cash equivalents, correlates with the prior two data points and shows considerable swings. It starts at 0.37 in 2021, drops significantly to 0.07 in 2022, rebounds sharply to 0.88 in 2023, and then falls again to 0.13 in 2024. The highest liquidity coverage occurs in 2023, indicating a peak in the company's ability to settle short-term liabilities immediately with cash.

Overall, the company experiences fluctuating liquidity and short-term financial stability, with periods of marked strength followed by considerable weakening. The pattern suggests external or internal factors impacting cash holdings and liabilities, which could influence the company's operational and financial risk profile.