ConocoPhillips (NYSE:COP)

Current Ratio

The current ratio demonstrated a general decline over the observed periods. Starting from a high of 2.11 in the second quarter of 2021, it dropped significantly to 1.34 by the end of 2021. Subsequent quarters showed some fluctuation, with brief improvements reaching 1.66 in the third quarter of 2023. However, the downward trend resumed afterward, culminating in values near 1.27 by the second quarter of 2025. This pattern indicates a gradual reduction in short-term liquidity, suggesting a tightening in the company’s ability to cover its short-term obligations with current assets.

Quick Ratio

The quick ratio mirrored the overall declining trend seen in the current ratio, though its values were consistently lower, reflecting more conservative liquidity measures excluding inventories. It decreased from a peak of 1.86 in the second quarter of 2021 to a low of around 1.01 by mid-2025. Temporary increments were evident, notably around the third quarter of 2023 correlating with an increase in the current ratio. The steady reduction highlights a decreasing buffer of liquid assets readily convertible to cash to meet immediate liabilities over the observed period.

Cash Ratio

The cash ratio exhibited the most pronounced volatility and the most significant decline among the three liquidity measures. Initially, the ratio was relatively strong at 1.31 in the second quarter of 2021 but then fell sharply to 0.55 at the close of 2021. Minor recoveries followed, with a peak of 0.91 in the third quarter of 2023, paralleling increases noted in the other ratios during that period. Subsequently, the cash ratio experienced a persistent decline, reaching a low of 0.49 in the second quarter of 2025. This trend suggests a considerable reduction in the company's most liquid assets (cash and equivalents), which could impact its capacity to manage immediate cash requirements.

The analysis of the quarterly financial data reveals notable trends in the liquidity position as measured by current assets, current liabilities, and the current ratio over the observed periods.

Current Assets

Current assets exhibited fluctuations with an overall moderate range. Starting at 14,614 million USD, they increased steadily to a peak of 20,453 million USD around September 2022. Following this peak, current assets showed a general declining trend, dropping to 13,939 million USD by June 2025. This suggests a reduction in readily available resources over the latter part of the period under review.

Current Liabilities

Current liabilities also showed an overall upward movement, beginning at 7,184 million USD and increasing to a high of 13,329 million USD by June 2025. The trend was relatively consistent, with occasional minor decreases but a clear rise in short-term obligations over time. This indicates growing obligations that may press on the liquidity position.

Current Ratio

The current ratio started at 2.03 and generally declined throughout the period, reaching a low near 1.27 in the latest quarters. This decreasing ratio reflects a narrowing margin between current assets and current liabilities, suggesting a weakening liquidity cushion. Periods such as the end of 2021 show particularly sharp declines in the ratio, corresponding with a drop in current assets and increased current liabilities, while brief improvements were seen around mid-2023 due to a rise in current assets.

In summary, the company’s liquidity has diminished over time, driven by a declining level of current assets alongside increasing current liabilities. The sustained drop in the current ratio below the 1.5 mark indicates a relatively tighter liquidity position that may warrant monitoring to ensure sufficient short-term financial flexibility.

The analysis of the quarterly financial data reveals several notable trends in liquidity as measured by the company's quick assets, current liabilities, and quick ratio over the given periods.

Total Quick Assets

The total quick assets fluctuated throughout the timeline, beginning at 12,980 million US dollars at the end of Q1 2021 and experiencing an upward movement to reach a peak of 17,776 million by Q3 2022. However, after reaching this high point, quick assets generally trended downward with some volatility, falling to 11,041 million by Q2 2025. This indicates a decrease in the most liquid assets available to meet short-term obligations toward the later periods.

Current Liabilities

Current liabilities showed a consistent increasing trend over the same period. Starting from 7,184 million US dollars at Q1 2021, liabilities increased steadily and peaked at 13,329 million by Q2 2025. This continuous rise in current liabilities suggests growing short-term obligations, which could pressure the company's liquidity position if not matched by corresponding increases in liquid assets.

Quick Ratio

The quick ratio followed a downward trend overall, beginning at a healthy 1.81 in Q1 2021 and declining to 1.01 by Q2 2025. This decline reflects the combined effect of decreasing quick assets and rising current liabilities. It suggests a diminishing ability to cover current liabilities with liquid assets immediately available, indicating a weakening short-term liquidity position over the analyzed timeframe.

In summary, while the company initially maintained a strong liquidity position with quick assets comfortably exceeding current liabilities, over time the increase in liabilities and decline in liquid resources have eroded this position. The gradual reduction in the quick ratio to near the threshold level signals a need for continued monitoring and potentially strategic management of working capital to maintain adequate short-term financial stability.

Total Cash Assets

The total cash assets show a fluctuating trend over the observed periods. Initially, there is strong growth from 8,499 million USD to a peak of 11,927 million USD by September 2021. This is followed by a sharp decline to 6,591 million USD by December 2021. Subsequently, cash assets recover moderately, reaching over 10,422 million USD in September 2022. Thereafter, the values generally trend downward, with minor rebounds, declining to 5,340 million USD by June 2025. The overall pattern indicates volatility with a peak around late 2021 to mid-2022, followed by a significant decrease towards the last periods.

Current Liabilities

Current liabilities exhibit a consistent upward trajectory throughout the timeline. Starting at 7,184 million USD in March 2021, liabilities rise steadily each quarter, reaching 13,329 million USD by June 2025. This increase is relatively smooth without substantial dips or reversals, indicating growing short-term obligations over time.

Cash Ratio

The cash ratio, representing liquidity measured by cash assets relative to current liabilities, decreases markedly over the periods. Initially, the ratio remains above 1.0, peaking at 1.31 in June 2021, which suggests a strong liquidity position early on. However, from late 2021, the ratio drops below 1.0 and continues a downward trend, reaching as low as 0.49 by June 2025. This decline in cash ratio, despite fluctuating cash assets, primarily reflects the continual rise in current liabilities. The sustained decrease points to a weakening liquidity position, potentially signaling reduced near-term financial flexibility.

Summary Insights

The data reveals that while cash assets experience volatility with a peak in 2021 and mid-2022 followed by decline, the current liabilities steadily increase throughout the entire period. The resulting cash ratio diminishes significantly, indicating that liquidity has weakened over time. This combination suggests an increasing pressure on cash reserves to meet rising short-term liabilities, which may warrant attention to liquidity management and operational cash flow strategies.