Aecom Technology Corporation (ACM)

Aecom Technology Corporation's liquidity ratios have shown some fluctuations over the past five years.

The current ratio, which measures the company's ability to pay off short-term liabilities with its current assets, has ranged between 1.05 and 1.24 during this period. As of September 30, 2024, the current ratio stands at 1.13, indicating that the company's current assets can cover its current liabilities, although the ratio has decreased slightly compared to the previous years.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has ranged from 0.74 to 0.88 over the same period. As of September 30, 2024, the quick ratio is 0.82, further tightening than the previous year, suggesting that the company might face difficulty in meeting its short-term obligations without relying on inventory.

The cash ratio, which assesses the company's ability to cover its current liabilities with cash and cash equivalents, has fluctuated between 0.22 and 0.32 over the five-year period. As of September 30, 2024, the cash ratio is 0.25, indicating that the company's cash position has improved slightly compared to the previous year.

Overall, while Aecom Technology Corporation has maintained a current ratio above 1, signaling short-term liquidity, the downward trend in the quick ratio raises concerns about the company's ability to quickly meet its obligations without relying on inventory. The cash ratio improvement provides some reassurance regarding the company's cash position in the short term.

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Additional liquidity measure

The cash conversion cycle of Aecom Technology Corporation has exhibited a fluctuating trend over the past five years. In the most recent fiscal year, ending on September 30, 2024, the company's cash conversion cycle decreased to 20.49 days from 18.54 days in the previous year. This suggests that Aecom has become more efficient in managing its cash flow, as it takes less time for the company to convert its investments in inventory and accounts receivable into cash.

Comparing the latest data to earlier years, we observe a significant improvement compared to the cash conversion cycle of 66.07 days in September 2020. The gradual reduction in the cash conversion cycle indicates that Aecom has been more successful in managing its working capital components. This is a positive sign for the company's liquidity and operational efficiency, as a shorter cash conversion cycle implies a quicker turnover of cash and a more streamlined working capital management process.

Despite the improvement in recent years, the company should continue to monitor and optimize its cash conversion cycle to sustain operational efficiency and strengthen its financial position. An ongoing focus on managing inventory levels, collecting accounts receivable promptly, and extending payment terms to suppliers effectively can further enhance Aecom's cash conversion cycle and overall financial performance.