ConocoPhillips (NYSE:COP)

Current Ratio

The current ratio experienced a noticeable decline from March 2020 through December 2021, dropping from 2.16 to 1.34. This indicates a reduction in short-term liquidity during this period. Following this decline, the ratio somewhat stabilized and exhibited minor fluctuations around the range of 1.27 to 1.66 from 2022 through mid-2025. The general trend after 2021 suggests a relatively stable but lower level of current assets relative to current liabilities compared to the earlier years.

Quick Ratio

The quick ratio also demonstrated a downward trend over the period analyzed. Starting at 1.72 in March 2020, it rose briefly to a high of 2.29 in June 2020 but then steadily declined, reaching 1.1 by December 2021. Post 2021, the ratio fluctuated slightly but continued on a gradual decline to values near 1.0 by mid-2025. This decline suggests a reduced proportion of highly liquid assets available to meet short-term obligations without relying on inventory sales.

Cash Ratio

The cash ratio began at 1.35 in March 2020, peaked at 1.92 in June 2020, and then showed a consistent downward trend through to December 2021, falling to 0.55. Thereafter, it experienced modest increases and decreases, stabilizing in the range of 0.49 to 0.91 from 2022 onwards. The continuing decline suggests a contraction in the company's immediate liquidity position, reflecting relatively lower cash and cash equivalent holdings compared to current liabilities over time.

Summary of Liquidity Trends

Across all three liquidity measures — current, quick, and cash ratios — a clear trend emerges: liquidity peaked early in 2020, followed by a consistent decline through late 2021. This is indicative of tightening short-term financial flexibility. From 2022 forward, liquidity levels remained relatively stable but at significantly lower levels than the pre-2021 period. The reduction in cash ratio is particularly notable, implying a shift away from highly liquid cash assets. The data collectively suggests a strategic or market-driven change in asset composition or liability management, resulting in more conservative liquidity buffers.

Current Assets

The current assets show fluctuations with a general upward trend from March 2020 to September 2022, peaking at 20,453 million US dollars in September 2022. After this peak, a decline is observed towards June 2023, followed by variability with a gradual increase again by June 2025. The values trend between approximate lows of around 11,000 million early in the period to highs near 20,000 million, indicating periods of asset accumulation and partial consolidation.

Current Liabilities

Current liabilities display a noticeable increase from March 2020 through September 2022, reaching a high of nearly 14,000 million US dollars. After this peak, there is a downward shift and subsequent oscillations around the 10,000 to 13,000 million range through June 2025. The increase in liabilities early on may reflect expanded operational or financial activities, while the later reduction suggests moderation or liability management efforts.

Current Ratio

The current ratio begins at a healthy 2.16 in March 2020 and improves to a high of 2.69 by June 2020. Subsequently, it trends downward quite steadily, dropping to approximately 1.27 by June 2025. This consistent decline indicates a reduction in short-term liquidity coverage relative to current liabilities, signaling that the buffer of current assets against liabilities has diminished over time. Despite this decline, the ratio remains above 1, implying that current assets continue to exceed current liabilities.

Overall Analysis

The data suggests that although both current assets and current liabilities increased substantially through 2022, liabilities grew at a faster pace, eroding the current ratio. The ensuing period shows management efforts to stabilize or reduce liabilities while current assets experienced less consistent growth. The declining current ratio throughout the period warrants attention as it may impact liquidity risk. The company retains a positive net working capital position, but maintaining or improving liquidity ratios will be important going forward to ensure short-term financial stability.

The analysis of the quarterly financial data reveals notable fluctuations and trends in the liquidity position over the reported periods. The focus on total quick assets, current liabilities, and the quick ratio highlights shifts in the company's short-term financial strength.

Total Quick Assets

Total quick assets exhibit a general upward trend from early 2020 through late 2022, increasing from around 10,458 million US dollars in March 2020 to a peak of 17,776 million US dollars in September 2022. However, after this peak, the amount declines, fluctuating notably in subsequent quarters and reaching approximately 11,041 million US dollars by June 2025. This pattern suggests an initial strengthening in liquid assets, followed by a period of reduction towards the later quarters.

Current Liabilities

Current liabilities show a consistent upward trajectory over the entire time frame. Starting from 6,075 million US dollars in March 2020, liabilities increase substantially, particularly during 2021 and 2022, where values exceed 13,000 million US dollars in some quarters. Despite some minor decreases in mid-2023, liabilities continue to trend upward and reach 10,986 million US dollars by June 2025. This persistent increase implies growing obligations in the short term, which could impact liquidity if not matched by asset growth.

Quick Ratio

The quick ratio, representing the ability to meet short-term obligations without relying on inventory sales, illustrates a declining trend over the periods examined. In March 2020, the quick ratio is relatively high at 1.72, increasing briefly to a peak of 2.29 in June 2020, indicating strong liquidity. Afterward, a general downward trend is observed, with the ratio dropping below 1.5 by late 2021 and approaching near 1.0 levels by mid-2025. By the last quarter reported, it trends slightly above 1.0, suggesting that the company's liquid assets are just sufficient to cover current liabilities, signaling reduced liquidity buffer compared to prior years.

Overall, the data points to an initial period of increased liquid assets and strong liquidity ratios, followed by growing current liabilities and a contracting quick ratio. This combination merits close attention, as the decreasing quick ratio alongside rising liabilities could indicate mounting pressure on the company's short-term financial flexibility if the trend continues without corrective actions to improve liquid asset bases.

Total cash assets

The total cash assets exhibit fluctuations throughout the observed periods. Initially, there is a gradual decline from March 2020 (US$8,194 million) to September 2020 (US$7,331 million), followed by a recovery and peak in September 2021 (US$11,927 million). Subsequently, there is another decline until December 2021 (US$6,591 million). From 2022 onwards, the cash assets fluctuate with a moderate upward trend, reaching a local peak in September 2022 (US$10,422 million), then declining through the end of 2023. In 2024 and early 2025, total cash assets generally trend downward, ending at US$5,340 million by June 2025, indicating a reduction in available liquid assets over the longer term.

Current liabilities

Current liabilities show an overall increasing trend from March 2020 through June 2025. Starting at US$6,075 million in March 2020, liabilities decrease significantly by June 2020 but then increase steadily, peaking in September 2022 at US$13,997 million. After this peak, liabilities modestly decline towards the end of 2023 but then resume a rising trajectory through early 2025, reaching US$13,329 million in June 2025. This pattern indicates growing short-term obligations, which could impact liquidity depending on cash resources available.

Cash ratio

The cash ratio mirrors the interplay between cash assets and current liabilities. Early in the period, the ratio is relatively strong, above 1.0, particularly peaking at 1.92 in June 2020, suggesting a robust liquidity position. However, starting in early 2021, the ratio declines steadily, dropping below 1.0 and reaching as low as 0.49 in June 2025. This decline indicates a diminished ability to cover short-term liabilities with cash alone, reflecting increasing liquidity risk despite fluctuations in cash assets and liabilities. The sustained decrease in this ratio over multiple years warrants attention for liquidity management.

Overall insights

The data shows that despite occasional increases in cash reserves, the company faces a continual increase in current liabilities, which outpaces growth in liquid assets. The consistent downward trend in the cash ratio highlights a weakening liquidity position, potentially necessitating strategic financial adjustments to ensure short-term obligations are manageable with readily available cash.