Apache Corp. (NYSE:APA)

The analysis of the liquidity ratios over the examined periods reveals several notable trends and fluctuations. The current ratio, which measures the company's ability to cover short-term liabilities with short-term assets, demonstrated an overall strengthening trend from the beginning of the period to the last recorded quarter. Initially hovering around values slightly below or close to 1.0, the current ratio experienced a significant increase starting mid-2013, reaching values consistently above 1.0 and peaking above 2.0 in 2015 and 2016. This suggests an enhanced capacity to meet short-term obligations with available current assets over time.

The quick ratio, reflecting the company's ability to meet short-term liabilities with its most liquid assets excluding inventories, generally exhibited a similar upward trajectory, but with more pronounced volatility. Early periods showed ratios well below 1.0, indicating less liquidity buffer beyond inventories. From mid-2013 onward, the quick ratio rose substantially, surpassing parity and reaching levels close to or above 1.0 during multiple quarters in 2014 and maintaining above 1.0 into 2015 and 2016. However, there were some significant dips observed notably in early 2015, where the ratio fell sharply before recovering. This pattern indicates fluctuations in the company's liquid asset base relative to its current liabilities but an overall improvement in liquid asset coverage.

The cash ratio, the most conservative liquidity measure focusing solely on cash and cash equivalents, was consistently low during the initial period, generally below 0.1, suggesting limited immediate cash availability relative to short-term liabilities. Beginning in mid-2013, there was a marked increase, with the ratio reaching peaks above 0.4 and even above 1.0 in mid-2015. Despite subsequent declines, cash ratios remained significantly higher compared to the early phase. This shift denotes a strengthened cash position, enhancing the company’s capacity for immediate liquidity, although the high volatility suggests variability in cash management or fluctuations in cash flows across quarters.

Overall, the data indicates a general improvement in liquidity from 2012 through 2016, as reflected in all three ratios. The company’s ability to cover short-term obligations has progressively increased, with particularly marked enhancements in liquid and cash assets during the latter years. However, the notable volatility in quick and cash ratios, especially around 2015, points to periods of fluctuating liquidity conditions that may warrant further examination. The upward trend in liquidity ratios suggests a strategic focus on strengthening the balance sheet’s short-term financial health over time.

Current assets

The current assets show a fluctuating pattern over the observed periods. Initially, from March 2012 to June 2013, the values remain relatively stable, with minor increases and decreases, moving from 4,954 million USD to 4,758 million USD. A significant rise is noted around mid to late 2013, reaching a peak of 6,366 million USD by December 2013. Thereafter, the values exhibit volatility, with sharp declines noted in late 2014 and mid-2015, dropping to 4,079 million USD in September 2015. The trend continues downward into 2016, with current assets stabilizing around 3,260 to 3,292 million USD by June 2016.

Current liabilities

Current liabilities also experience fluctuations over the timeline. From March 2012 to March 2014, there is a slight decline overall, decreasing from 4,698 million USD to 4,356 million USD, with intermediate ups and downs. Starting in March 2014, a notable downward trend is observed, with liabilities dropping substantially to a low of 1,565 million USD by March 2016. This decline suggests a reduction in short-term obligations over this period.

Current ratio

The current ratio reflects a varying liquidity position across the quarters. It starts slightly above 1.0 in early 2012 but dips below 1.0 through much of 2012 and early 2013, indicating potential short-term liquidity concerns during this period. In late 2013, the ratio improves markedly, exceeding 1.3 and continuing to improve toward the end of 2014, reaching a peak ratio of 1.75 in December 2014. A significant jump is observed in mid-2015, with values surpassing 2.0, peaking at 2.31 in June 2015. Throughout 2016, the current ratio stabilizes above 2.0, suggesting a stronger short-term liquidity position relative to earlier periods.

Summary of patterns and insights

The data shows that while current assets fluctuate considerably, current liabilities have been steadily reduced over the years, particularly after 2014. This liability reduction has likely contributed to the improved current ratio, signaling enhanced liquidity and financial stability. The sharp increase in the current ratio post-2014 indicates a strengthening ability to cover short-term obligations, despite the variability in asset levels. The decline in current assets toward 2016, combined with markedly lower liabilities, results in a liquidity position that appears more conservative, potentially reflecting strategic balance sheet management or operational changes.

Total Quick Assets

The total quick assets exhibit significant fluctuations over the analyzed periods. Starting at approximately 3,408 million USD in early 2012, the value showed a slight decline toward mid-2012 before rising notably in the latter half of 2013, peaking at about 4,858 million USD. Subsequently, from 2014 onward, a general downward trend is observed, with occasional temporary increases. By mid-2016, quick assets settled around 2,217 million USD, representing a substantial reduction compared to the earlier peak.

Current Liabilities

Current liabilities generally decreased over the reported periods. Initially, in early 2012, current liabilities were recorded at approximately 4,698 million USD, rising to a peak near 5,562 million USD at the beginning of 2013. From that peak, liabilities progressively declined, with a significant drop in mid-2015, reaching nearly 1,565 million USD by mid-2016. This consistent decrease indicates an improvement in short-term obligations management or reduction in payable amounts.

Quick Ratio

The quick ratio, reflecting liquidity, demonstrated considerable variability over the timeframe. Initially below 1, fluctuating between 0.58 and 0.73 in 2012, the ratio increased to exceed 1 during late 2013, indicating that quick assets exceeded current liabilities at that point. The ratio then declined below 1 once again through 2014 and early 2015. Notably, a sharp improvement occurred beginning mid-2015, with the ratio rising dramatically to 1.9 and stabilizing above 1.3 through mid-2016. This suggests enhanced short-term liquidity position and a stronger ability to cover current liabilities with liquid assets during the latest period.

Overall Analysis

The interplay between quick assets and current liabilities strongly influenced liquidity as measured by the quick ratio. Peaks and troughs in quick assets did not always align with those in current liabilities, impacting the liquidity position accordingly. The reduction in current liabilities beginning in 2014 and especially mid-2015 played a critical role in improving the quick ratio despite some declines in quick assets. The substantial rise in the quick ratio after mid-2015 indicates a significant improvement in the company’s ability to meet short-term obligations through liquid assets, reflecting better financial stability and potentially more conservative liability management during this later period.

The analysis reveals notable fluctuations in the liquidity position of the company over the analyzed quarters.

Total Cash Assets

The total cash assets exhibit substantial variability throughout the periods. Initially, cash assets declined from 245 million USD at the end of March 2012 to 160 million USD by December 2012. Subsequently, there was a significant increase reaching a peak of 1,906 million USD by December 2013. This peak was followed by a downward trend, decreasing to lower levels around 229 million USD by March 2015. Afterward, cash assets surged again sharply to reach 2,950 million USD by June 2015, then gradually tapered off towards the middle of 2016, ending at 1,201 million USD. This pattern indicates periods of both aggressive cash accumulation and substantial cash utilization or distribution.

Current Liabilities

Current liabilities initially rose from 4,698 million USD at the start of 2012 to a peak of 5,562 million USD by March 2013. Thereafter, a declining trend is seen, with current liabilities reducing steadily to approximately 1,565 million USD by March 2016, where it stabilizes through mid-2016 around 1,570 million USD. This decline suggests an improvement in the company’s short-term obligations management, potentially indicating debt repayment or improved working capital control over time.

Cash Ratio

The cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, follows a complex trajectory. It started low at 0.05 in early 2012, increasing slightly and then jumping significantly to 0.41 by December 2013. After a dip to 0.04 by March 2015, the ratio experienced a dramatic increase to 1.24 by June 2015, indicating that cash assets exceeded current liabilities at this point. Following this peak, the ratio declined but remained elevated compared to early 2012 levels, fluctuating between 0.64 and 0.80 by mid-2016. This trend reflects an improved liquidity position, suggesting better short-term financial stability in recent periods compared to earlier years.

Overall, the trend indicates the company experienced periods of significant cash accumulation aligned with reductions in current liabilities, improving liquidity substantially by 2015. However, fluctuations in cash assets and the cash ratio point to considerable variability in cash management and possibly occasional reliance on cash usage. The general movement towards a stronger cash ratio over time suggests enhanced readiness to meet short-term obligations from liquid resources as of the latest periods analyzed.