Arcosa Inc (ACA)

Arcosa Inc's liquidity ratios provide insight into the company's ability to meet short-term financial obligations. The current ratio has shown a slight decline over the past five years, from 2.67 in 2019 to 2.12 in 2023. This ratio indicates that Arcosa Inc's current assets can cover 2.12 times its current liabilities, showing a slightly decreased liquidity position in the most recent year.

The quick ratio, which excludes inventory from current assets, also displays a decreasing trend from 1.67 in 2019 to 1.18 in 2023. This ratio suggests that Arcosa Inc may have more limited ability to cover its short-term liabilities using its most liquid assets.

Furthermore, the cash ratio, which indicates the company's ability to cover its current liabilities with its cash and cash equivalents, shows a significant decrease from 0.96 in 2019 to 0.36 in 2023. This suggests a decline in Arcosa Inc's ability to quickly pay off its obligations using its cash reserves alone.

Overall, the liquidity ratios for Arcosa Inc indicate a decreasing trend over the past five years, signaling potential challenges in meeting short-term obligations solely based on existing liquid assets. Management may need to closely monitor and manage the company's liquidity position to ensure it remains robust and sustainable.

---

Additional liquidity measure

The cash conversion cycle measures the time it takes for a company like Arcosa Inc to convert its investments in inventory and other resources into cash flows from sales. It is a crucial indicator of operational efficiency and liquidity management.

Arcosa Inc's cash conversion cycle has shown fluctuation over the past five years, ranging from 79.48 days to 92.26 days. In 2023, the company's cash conversion cycle improved slightly to 81.79 days compared to the previous year, indicating a more efficient management of working capital.

A shorter cash conversion cycle suggests that Arcosa Inc is able to sell its inventory more quickly and collect receivables faster, thereby generating cash flows at a faster rate. On the other hand, a longer cycle may imply inefficiencies in inventory management, credit terms, or sales practices.

Overall, Arcosa Inc should continue monitoring and analyzing its cash conversion cycle to identify opportunities for improvement in working capital management, which can positively impact the company's liquidity position and overall financial health.