Aecom Technology Corporation (ACM)
Liquidity ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.05 | 1.08 | 1.12 | 1.24 | 1.17 |
| Quick ratio | 0.74 | 0.75 | 0.81 | 0.88 | 0.71 |
| Cash ratio | 0.22 | 0.22 | 0.22 | 0.32 | 0.17 |
Based on the provided data, AECOM's liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to meet short-term liabilities with short-term assets, decreased from 1.17 in 2019 to 1.05 in 2023. This indicates a potential deterioration in AECOM's short-term financial strength. Similarly, the quick ratio, which excludes inventory from current assets, also experienced a downward trend, declining from 1.17 in 2019 to 1.04 in 2023.
Furthermore, the cash ratio, which assesses the company's ability to cover current liabilities with cash and cash equivalents, declined from 0.61 in 2019 to 0.60 in 2023. This suggests a slightly reduced capacity to settle short-term obligations with readily available cash resources.
Overall, these liquidity ratios indicate a potential weakening of AECOM's ability to meet its short-term financial obligations with its current asset base. It would be advisable for stakeholders to closely monitor the company's liquidity position and management's strategies to address any liquidity concerns.
Additional liquidity measure
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 18.54 | 45.15 | 53.05 | 66.07 | 44.15 |
The cash conversion cycle of AECOM has exhibited fluctuations over the past five years. In the most recent period ending on September 30, 2023, the company's cash conversion cycle stands at 5.43 days. This indicates that AECOM takes approximately 5.43 days to convert its resources such as inventory and accounts receivable into cash.
Comparing this to previous years, we observe a decreasing trend in the cash conversion cycle, suggesting more efficient management of working capital. In contrast, in September 2021, the cycle was relatively longer at 12.95 days, indicating a slower conversion of resources into cash at that time.
The downward trend in the cash conversion cycle signifies potential improvements in inventory management and accounts receivable collection processes, allowing the company to free up cash more rapidly. This may indicate enhanced efficiency and liquidity within the organization.