Alcoa Corp (AA)

Liquidity ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.45 1.66 1.80 1.78 1.75 1.81 1.81 1.62 1.56 1.46 1.57 1.52 1.64 1.76 1.42 1.50 1.38 1.48 1.51 1.47
Quick ratio 0.59 0.67 0.73 0.75 0.75 0.85 0.89 0.75 0.84 1.18 1.31 1.00 0.78 1.02 0.66 0.67 0.60 0.68 0.68 0.70
Cash ratio 0.32 0.37 0.42 0.45 0.45 0.55 0.58 0.45 0.56 0.89 1.04 0.79 0.58 0.75 0.43 0.37 0.34 0.34 0.33 0.36

Alcoa Corp's liquidity ratios have displayed some fluctuations over the past eight quarters. The current ratio, which indicates the company's ability to cover short-term obligations with its current assets, has ranged from 1.45 to 1.80 during this period. It peaked in Q2 2023 at 1.80, indicating the company had $1.80 in current assets for every $1 of current liabilities. However, it decreased slightly in Q4 2023 to 1.45.

The quick ratio, a more stringent measure of liquidity than the current ratio as it excludes inventories from current assets, has similarly fluctuated from 0.74 to 1.02. Alcoa Corp's quick ratio was highest in Q3 2022 at 1.00 but has since declined to 0.74 in Q4 2023, indicating a potential decrease in the company's ability to quickly cover its short-term liabilities without relying on inventory.

The cash ratio, which provides the most conservative measure of liquidity by considering only cash and cash equivalents relative to current liabilities, has varied between 0.47 and 0.71. The lowest point of 0.47 was seen in Q4 2022, suggesting a potential liquidity challenge at that time, while the ratio improved to 0.56 in Q2 2023 before declining to 0.47 in Q4 2023.

Overall, while Alcoa Corp has generally maintained ratios above 1 in the current and quick ratios, suggesting sufficient liquidity to cover short-term obligations, the decreasing trends in these ratios and the cash ratio indicate a potential need for monitoring its liquidity position closely.

Additional liquidity measure

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 43.99 52.85 58.62 57.08 50.00 56.03 60.77 67.65 38.97 37.58 32.91 31.57 21.89 25.67 25.99 35.47 33.53 56.96 136.76 130.68

The cash conversion cycle for Alcoa Corp has fluctuated over the past eight quarters, ranging from a low of 44.47 days in Q4 2023 to a high of 64.79 days in Q1 2022. A lower cash conversion cycle indicates that the company is able to convert its investments in inventory and accounts receivable into cash more quickly. Conversely, a higher cash conversion cycle suggests that the company takes longer to convert its investments into cash.

In analyzing the trend over the past quarters, we observe a general decrease in the cash conversion cycle from Q1 2022 to Q4 2023. This indicates that Alcoa Corp has improved its efficiency in managing its working capital, potentially by reducing the time taken to sell inventory and collect receivables, or by extending the time taken to pay its own suppliers.

However, it is noteworthy that there was an increase in the cash conversion cycle in Q3 2023 compared to the previous quarter, which reversed the declining trend seen in the previous periods. This increase may be a result of changes in the company's operations or fluctuations in market conditions that impacted its ability to efficiently manage working capital.

Overall, a lower and decreasing cash conversion cycle is generally considered favorable as it indicates efficient management of working capital. However, it is important to further investigate the factors contributing to the fluctuations in the cash conversion cycle to assess the sustainability of Alcoa Corp's working capital management strategies.