ABM Industries Incorporated (ABM)

ABM Industries Incorporated's liquidity ratios have fluctuated over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has varied from a high of 1.46 in 2020 to a low of 1.09 in 2021. In 2024, the current ratio stands at 1.33, indicating that the company has $1.33 in current assets for every $1 in current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown volatility. ABM Industries' quick ratio has ranged from a low of 0.03 in 2024 to a high of 0.37 in 2020. A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on inventory to generate cash.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents to current liabilities, has remained relatively stable over the past five years. The company's cash ratio has ranged from 0.05 in 2024 to 0.41 in 2020. A cash ratio above 0.1 is generally considered healthy, indicating that the company has sufficient cash on hand to cover its short-term liabilities.

Overall, ABM Industries' liquidity ratios suggest that the company has maintained a generally healthy liquidity position over the years, although there have been fluctuations. It is important for the company to continue monitoring and managing its liquidity to ensure it can meet its short-term financial obligations efficiently.

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Additional liquidity measure

The cash conversion cycle (CCC) for ABM Industries Incorporated has shown a consistent improvement over the past five years. The company has successfully reduced the time it takes to convert its investments in inventory and receivables into cash, resulting in a negative CCC each year.

In the most recent fiscal year ending October 31, 2024, ABM Industries achieved a cash conversion cycle of -14.52 days, indicating that the company is able to generate cash flows from its operating activities before paying its suppliers and creditors. This suggests that the company has effectively managed its working capital and is operating efficiently.

Compared to the previous four years, the trend shows a steady decrease in the CCC, with the lowest being in 2024. This improvement in the cash conversion cycle signifies that ABM Industries has been able to streamline its operations, manage its inventory levels, and collect receivables in a timely manner.

Overall, the consistent negative cash conversion cycle for ABM Industries over the past five years reflects the company's ability to efficiently manage its working capital and generate cash flows from its core business operations, which is a positive indicator of financial health and operational efficiency.