Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Marathon Petroleum Corp., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 1.59 | 1.76 | 1.70 | 1.81 | 1.25 | |
| Quick ratio | 1.08 | 1.26 | 1.22 | 0.39 | 0.58 | |
| Cash ratio | 0.51 | 0.59 | 0.61 | 0.03 | 0.09 |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
The analysis of the liquidity ratios over the five-year period reveals several noteworthy trends in the company's short-term financial health and ability to meet its obligations.
- Current Ratio
- The current ratio demonstrated an overall increase from 1.25 in 2019 to a peak of 1.81 in 2020, indicating improved short-term liquidity during this period. Although it slightly declined to 1.7 in 2021 and remained relatively stable at 1.76 in 2022, the ratio decreased again to 1.59 in 2023. Despite these fluctuations, the current ratio remained above 1.0 throughout, suggesting that the company maintained sufficient current assets to cover current liabilities consistently.
- Quick Ratio
- The quick ratio experienced significant variability. It decreased sharply from 0.58 in 2019 to 0.39 in 2020, which could imply a greater reliance on inventory or less liquid current assets during that year. However, from 2020 onwards, the quick ratio exhibited a strong recovery, climbing to 1.22 in 2021 and slightly increasing to 1.26 in 2022 before moderately declining to 1.08 in 2023. This upward trend suggests an improvement in the company's most liquid assets relative to its current liabilities, enhancing its ability to meet immediate obligations without relying on inventory sales.
- Cash Ratio
- The cash ratio was notably low for the initial two years, decreasing from 0.09 in 2019 to 0.03 in 2020, indicating minimal cash and cash equivalents coverage of current liabilities. A marked improvement occurred in 2021, with the ratio increasing to 0.61, and it remained relatively steady near this level in 2022 at 0.59 and slightly decreased to 0.51 in 2023. This pattern reflects a strategic bolstering of cash reserves or liquid assets over time, providing a stronger cash buffer to manage short-term financial obligations.
Overall, the data suggests that while liquidity ratios initially were moderate to low, particularly in terms of quick and cash ratios, there was a pronounced improvement from 2021 onward. The company enhanced its liquid asset positioning relative to current liabilities, indicating strengthened financial flexibility and a more conservative liquidity management approach in recent years. Minor declines in 2023 across all ratios warrant monitoring but do not presently indicate severe liquidity concerns.
Current Ratio
Marathon Petroleum Corp., current ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Current assets | 32,131) | 35,242) | 30,496) | 28,287) | 20,170) | |
| Current liabilities | 20,150) | 20,020) | 17,898) | 15,663) | 16,147) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 1.59 | 1.76 | 1.70 | 1.81 | 1.25 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Chevron Corp. | 1.27 | 1.47 | 1.26 | 1.18 | — | |
| ConocoPhillips | 1.43 | 1.46 | 1.34 | 2.25 | — | |
| Exxon Mobil Corp. | 1.48 | 1.41 | 1.04 | 0.80 | — | |
| Occidental Petroleum Corp. | 0.92 | 1.15 | 1.23 | 1.07 | — | |
| Current Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.37 | 1.42 | 1.15 | 1.00 | — | |
| Current Ratio, Industry | ||||||
| Energy | 1.37 | 1.40 | 1.15 | 1.02 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Current ratio = Current assets ÷ Current liabilities
= 32,131 ÷ 20,150 = 1.59
2 Click competitor name to see calculations.
The financial data reveals several notable trends concerning liquidity and short-term financial stability over the five-year period from 2019 to 2023.
- Current Assets
- Current assets show a generally upward trend from 2019 through 2022, increasing from $20,170 million to $35,242 million. This growth reflects an improvement in the company's liquid and near-liquid resources over this timeframe. However, there is a decline in 2023, with current assets decreasing to $32,131 million, which may indicate a reduction in short-term resources or an allocation of assets elsewhere.
- Current Liabilities
- Current liabilities have also increased over the period, though the progression is less consistent. Starting at $16,147 million in 2019, current liabilities slightly decreased in 2020 to $15,663 million but rose steadily afterward to reach $20,150 million in 2023. This increase could suggest growing short-term obligations or increased operational liabilities.
- Current Ratio
- The current ratio exhibits fluctuations within a relatively stable range. It improved significantly from 1.25 in 2019 to a peak of 1.81 in 2020, suggesting improved short-term liquidity. After slightly decreasing to 1.70 in 2021 and rising again to 1.76 in 2022, the ratio declined to 1.59 in 2023. Despite this decline, the ratio remains above 1, indicating that current assets exceed current liabilities, but the downward movement could signal a tightening liquidity position.
In summary, there is evidence of growth in current assets and liabilities, with liquidity metrics remaining relatively strong but showing some signs of weakening in the latest period. The company’s ability to cover short-term obligations has improved since 2019, though the recent decreases in both current assets and the current ratio warrant monitoring to maintain financial stability.
Quick Ratio
Marathon Petroleum Corp., quick ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 5,443) | 8,625) | 5,291) | 415) | 1,527) | |
| Short-term investments | 4,781) | 3,145) | 5,548) | —) | —) | |
| Receivables, less allowance for doubtful accounts | 11,619) | 13,477) | 11,034) | 5,760) | 7,872) | |
| Total quick assets | 21,843) | 25,247) | 21,873) | 6,175) | 9,399) | |
| Current liabilities | 20,150) | 20,020) | 17,898) | 15,663) | 16,147) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 1.08 | 1.26 | 1.22 | 0.39 | 0.58 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Chevron Corp. | 0.87 | 1.12 | 0.90 | 0.77 | — | |
| ConocoPhillips | 1.21 | 1.27 | 1.10 | 1.98 | — | |
| Exxon Mobil Corp. | 1.06 | 1.03 | 0.69 | 0.44 | — | |
| Occidental Petroleum Corp. | 0.60 | 0.68 | 0.84 | 0.50 | — | |
| Quick Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.99 | 1.06 | 0.80 | 0.62 | — | |
| Quick Ratio, Industry | ||||||
| Energy | 0.98 | 1.04 | 0.81 | 0.63 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 21,843 ÷ 20,150 = 1.08
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets exhibited a significant fluctuation over the analyzed period. Initially, there was a decline from 9,399 million US dollars at the end of 2019 to 6,175 million US dollars by the end of 2020. This was followed by a substantial increase reaching 21,873 million US dollars in 2021 and continuing to rise to 25,247 million US dollars in 2022 before a slight decrease to 21,843 million US dollars in 2023. This trend suggests considerable variability in liquid assets over the five-year span with a peak in 2022.
- Current Liabilities
- Current liabilities showed a generally increasing trend throughout the period, rising from 16,147 million US dollars in 2019 to 20,150 million US dollars by the end of 2023. The increase was steady each year, reflecting a gradual expansion of short-term obligations.
- Quick Ratio
- The quick ratio, which indicates the company's liquidity position, followed a pattern similar to that of quick assets. It dropped from 0.58 in 2019 to a low of 0.39 in 2020, indicating a weaker liquidity position during that year. This ratio then improved markedly, increasing to 1.22 in 2021 and slightly further to 1.26 in 2022, demonstrating a stronger ability to meet short-term liabilities with quick assets. However, the ratio decreased somewhat to 1.08 in 2023, still above 1.0 but indicating a slight reduction in liquidity relative to previous years.
- Overall Analysis
- The data reflect a period of liquidity strain in 2020, likely related to a reduction in quick assets and a persistent level of current liabilities. The subsequent recovery and improvement in liquidity ratios suggest effective management actions to bolster liquid assets from 2021 onwards. Despite a slight liquidity dip in 2023, the company maintained a healthy quick ratio above 1, indicating sufficient quick assets to cover current liabilities at year-end.
Cash Ratio
Marathon Petroleum Corp., cash ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||
| Cash and cash equivalents | 5,443) | 8,625) | 5,291) | 415) | 1,527) | |
| Short-term investments | 4,781) | 3,145) | 5,548) | —) | —) | |
| Total cash assets | 10,224) | 11,770) | 10,839) | 415) | 1,527) | |
| Current liabilities | 20,150) | 20,020) | 17,898) | 15,663) | 16,147) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 0.51 | 0.59 | 0.61 | 0.03 | 0.09 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Chevron Corp. | 0.25 | 0.52 | 0.21 | 0.25 | — | |
| ConocoPhillips | 0.66 | 0.72 | 0.55 | 1.46 | — | |
| Exxon Mobil Corp. | 0.48 | 0.43 | 0.12 | 0.08 | — | |
| Occidental Petroleum Corp. | 0.16 | 0.13 | 0.33 | 0.24 | — | |
| Cash Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.41 | 0.47 | 0.21 | 0.22 | — | |
| Cash Ratio, Industry | ||||||
| Energy | 0.40 | 0.45 | 0.22 | 0.22 | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 2023 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 10,224 ÷ 20,150 = 0.51
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets demonstrate significant fluctuation over the five-year period. Initially, there is a steep decline from 1,527 million USD in 2019 to 415 million USD in 2020. This is followed by a remarkable increase in 2021, reaching 10,839 million USD. The cash assets remain relatively stable in 2022, with a slight rise to 11,770 million USD, before declining moderately to 10,224 million USD in 2023. This pattern suggests a period of liquidity tightening in 2020, succeeded by aggressive cash accumulation in the subsequent years.
- Current Liabilities
- Current liabilities show a consistent upward trend throughout the period. Starting from 16,147 million USD in 2019, there is a gradual decrease to 15,663 million USD in 2020. However, from 2020 onwards, liabilities increase steadily each year, reaching 17,898 million USD in 2021, 20,020 million USD in 2022, and slightly rising to 20,150 million USD in 2023. This increasing trend indicates growing short-term obligations, which may influence liquidity management strategies.
- Cash Ratio
- The cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, mirrors the changes seen in cash assets and current liabilities. The ratio diminishes from 0.09 in 2019 to a low of 0.03 in 2020, reflecting reduced liquidity relative to current liabilities. In 2021, there is a substantial improvement to 0.61, maintaining a similar level in 2022 at 0.59. In 2023, the ratio slightly decreases to 0.51 but remains significantly higher than the levels observed in 2019 and 2020. This indicates an enhanced liquidity position in recent years, despite increasing current liabilities.