Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Texas Pacific Land Corp., liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Current ratio | 19.43 | 16.00 | 10.34 | 15.56 | 14.99 | |
| Quick ratio | 19.24 | 15.53 | 10.28 | 15.40 | 14.99 | |
| Cash ratio | 16.34 | 12.90 | 8.41 | 13.15 | 12.41 |
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 liquidity position exhibits exceptional strength across the five-year period, characterized by ratios that significantly exceed standard industry benchmarks. A consistent pattern is observed where current assets vastly outweigh current liabilities, indicating a minimal risk of short-term insolvency and a high capacity to meet immediate financial obligations.
- Current and Quick Ratios
- The current ratio demonstrated an upward trajectory over the period, rising from 14.99 in 2019 to 19.43 by 2023. A notable contraction occurred in 2021, where the ratio declined to 10.34 before rebounding strongly. The quick ratio closely mirrors this movement, ending the period at 19.24. The negligible variance between the current and quick ratios suggests that the company maintains almost no inventory, as the liquidity is not dependent on the sale of physical goods.
- Cash Ratio
- The cash ratio remained consistently high, starting at 12.41 in 2019 and peaking at 16.34 in 2023. Similar to the other liquidity metrics, a dip was recorded in 2021, reaching 8.41. The high values of the cash ratio indicate that a substantial portion of the company's current assets is held in cash or cash equivalents, providing a significant buffer against financial volatility.
- Liquidity Trend Analysis
- A cyclical movement is evident across all three metrics, with a synchronized decline in 2021 followed by a period of aggressive expansion in 2022 and 2023. The widening gap between the 2019 levels and the 2023 levels suggests an increasing accumulation of liquid assets relative to short-term debt, reinforcing a highly conservative liquidity posture.
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Current Ratio
Texas Pacific Land 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 thousands) | ||||||
| Current assets | 862,464) | 633,401) | 526,513) | 332,530) | 366,640) | |
| Current liabilities | 44,387) | 39,595) | 50,900) | 21,376) | 24,464) | |
| Liquidity Ratio | ||||||
| Current ratio1 | 19.43 | 16.00 | 10.34 | 15.56 | 14.99 | |
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Chevron Corp. | 1.27 | 1.47 | 1.26 | — | — | |
| ConocoPhillips | 1.43 | 1.46 | 1.34 | — | — | |
| ExxonMobil Holdings Corp. | 1.48 | 1.41 | 1.04 | — | — | |
| Current Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.41 | 1.44 | 1.14 | — | — | |
| Current Ratio, Industry | ||||||
| Energy | 1.40 | 1.42 | 1.15 | — | — | |
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
= 862,464 ÷ 44,387 = 19.43
2 Click competitor name to see calculations.
The company maintains an exceptionally strong liquidity position, characterized by current assets that vastly exceed current liabilities across the analyzed five-year period. This profile indicates a minimal risk of short-term insolvency and a substantial capacity to meet immediate financial obligations.
- Current Asset Trends
- Current assets exhibited a consistent upward trajectory following a marginal decrease in 2020. Total current assets rose from 366.6 million US$ in 2019 to 862.5 million US$ by December 31, 2023, representing a total increase of approximately 135% over the five-year span. The most significant growth phase occurred between 2020 and 2023, indicating a rapid accumulation of liquid resources.
- Current Liability Dynamics
- Short-term obligations remained remarkably low and stable relative to the overall balance sheet. Although liabilities peaked in 2021 at 50.9 million US$, they remained under 45 million US$ for the majority of the period. The low absolute value of these liabilities relative to assets suggests a conservative financing strategy with minimal reliance on short-term debt.
- Current Ratio Interpretation
- The current ratio remained significantly above standard industry benchmarks throughout the period. A temporary compression to 10.34 was observed in 2021, coinciding with the period's highest current liabilities. However, the ratio recovered and expanded to a peak of 19.43 by the end of 2023. This trend confirms that the company holds an extensive liquidity cushion, with current assets covering current liabilities nearly 20 times over by the final reporting date.
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Quick Ratio
Texas Pacific Land 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 thousands) | ||||||
| Cash and cash equivalents | 725,169) | 510,834) | 428,242) | 281,046) | 303,645) | |
| Accounts receivable and accrued receivables, net | 128,971) | 103,983) | 95,217) | 48,216) | 62,995) | |
| Total quick assets | 854,140) | 614,817) | 523,459) | 329,262) | 366,640) | |
| Current liabilities | 44,387) | 39,595) | 50,900) | 21,376) | 24,464) | |
| Liquidity Ratio | ||||||
| Quick ratio1 | 19.24 | 15.53 | 10.28 | 15.40 | 14.99 | |
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Chevron Corp. | 0.87 | 1.12 | 0.90 | — | — | |
| ConocoPhillips | 1.21 | 1.27 | 1.10 | — | — | |
| ExxonMobil Holdings Corp. | 1.06 | 1.03 | 0.69 | — | — | |
| Quick Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 1.02 | 1.09 | 0.80 | — | — | |
| Quick Ratio, Industry | ||||||
| Energy | 1.01 | 1.06 | 0.80 | — | — | |
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
= 854,140 ÷ 44,387 = 19.24
2 Click competitor name to see calculations.
The liquidity profile exhibits an exceptionally strong position, characterized by a substantial surplus of liquid assets relative to short-term obligations. Over the five-year period ending December 31, 2023, there is a marked expansion in the company's ability to cover current liabilities without relying on inventory liquidation.
- Quick Asset Trajectory
- Total quick assets demonstrate a significant upward trend, growing from 366,640 thousand US dollars in 2019 to 854,140 thousand US dollars by 2023. Despite a marginal decline in 2020, the subsequent years show accelerated growth, with assets more than doubling over the analyzed period.
- Current Liability Management
- Current liabilities have remained relatively stable and low in proportion to assets. While a peak was observed in 2021 at 50,900 thousand US dollars, the liabilities in 2023 settled at 44,387 thousand US dollars, indicating a controlled level of short-term indebtedness.
- Quick Ratio Analysis
- The quick ratio consistently remains far above the conventional benchmark of 1.0, signaling an extremely conservative liquidity posture. The ratio fluctuated from 14.99 in 2019 to a low of 10.28 in 2021—driven by the temporary spike in current liabilities—before recovering to a period high of 19.24 in 2023.
The overall trend indicates a strengthening financial cushion. The simultaneous increase in quick assets and the relative stability of current liabilities have resulted in a superior liquidity position by the end of 2023, reducing any operational risk associated with short-term solvency.
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Cash Ratio
Texas Pacific Land 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 thousands) | ||||||
| Cash and cash equivalents | 725,169) | 510,834) | 428,242) | 281,046) | 303,645) | |
| Total cash assets | 725,169) | 510,834) | 428,242) | 281,046) | 303,645) | |
| Current liabilities | 44,387) | 39,595) | 50,900) | 21,376) | 24,464) | |
| Liquidity Ratio | ||||||
| Cash ratio1 | 16.34 | 12.90 | 8.41 | 13.15 | 12.41 | |
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Chevron Corp. | 0.25 | 0.52 | 0.21 | — | — | |
| ConocoPhillips | 0.66 | 0.72 | 0.55 | — | — | |
| ExxonMobil Holdings Corp. | 0.48 | 0.43 | 0.12 | — | — | |
| Cash Ratio, Sector | ||||||
| Oil, Gas & Consumable Fuels | 0.43 | 0.49 | 0.20 | — | — | |
| Cash Ratio, Industry | ||||||
| Energy | 0.42 | 0.47 | 0.21 | — | — | |
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
= 725,169 ÷ 44,387 = 16.34
2 Click competitor name to see calculations.
An evaluation of liquidity indicators reveals an exceptionally strong cash position and a high capacity to meet short-term obligations. The cash ratio has remained significantly above the standard benchmark of 1.0 throughout the five-year period, indicating a conservative financial posture and minimal reliance on other current assets to settle current liabilities.
- Total Cash Assets
- A consistent upward trend is observed in total cash assets, which grew from 303,645 thousand US dollars in 2019 to 725,169 thousand US dollars by the end of 2023. This represents a substantial expansion of liquid reserves, with the most accelerated growth occurring between 2022 and 2023.
- Current Liabilities
- Current liabilities have remained relatively low and stable in proportion to the available cash. While there was a peak in 2021 at 50,900 thousand US dollars, liabilities remained minimal relative to asset growth, concluding the period at 44,387 thousand US dollars in 2023.
- Cash Ratio Trends
- The cash ratio exhibited fluctuations but maintained a very high baseline, starting at 12.41 in 2019 and ending at 16.34 in 2023. A temporary contraction occurred in 2021, where the ratio decreased to 8.41 due to a simultaneous increase in current liabilities and a slower rate of cash accumulation. The subsequent recovery to 16.34 suggests a reinforced liquidity cushion, meaning cash assets now cover current liabilities more than sixteen times over.
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