Aecom Technology Corporation (ACM)
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 | 1.05 | 1.05 | 1.10 | 1.09 | 1.08 | 1.08 | 1.06 | 1.08 | 1.08 | 1.12 | 1.10 | 1.12 | 1.15 | 1.24 | 1.27 | 1.23 | 1.16 | 1.17 | 1.22 | 1.23 |
| Quick ratio | 0.72 | 0.74 | 0.76 | 0.73 | 0.75 | 0.75 | 0.73 | 0.75 | 0.77 | 0.81 | 0.82 | 0.83 | 0.80 | 0.88 | 0.83 | 0.68 | 0.56 | 0.71 | 0.77 | 0.70 |
| Cash ratio | 0.20 | 0.22 | 0.22 | 0.20 | 0.21 | 0.22 | 0.18 | 0.18 | 0.20 | 0.22 | 0.24 | 0.23 | 0.22 | 0.32 | 0.23 | 0.19 | 0.11 | 0.17 | 0.20 | 0.14 |
The current ratio, quick ratio, and cash ratio are all key liquidity ratios used to assess a company's ability to meet its short-term obligations. Looking at AECOM's liquidity ratios over the past eight quarters, we can see some trends and fluctuations.
1. Current ratio: AECOM's current ratio has been relatively stable around the range of 1.05 to 1.10 over the quarters, indicating that the company has just about enough current assets to cover its current liabilities. However, the ratio is hovering close to 1, which could suggest a potential liquidity risk if there are unexpected increases in short-term obligations.
2. Quick ratio: The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown stability in the range of 1.03 to 1.08. This indicates that AECOM can meet its short-term obligations more readily than when considering all current assets. The consistent levels of the quick ratio suggest that AECOM has a sufficient cushion of liquid assets.
3. Cash ratio: The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents, has fluctuated between 0.59 to 0.63. A ratio below 1 indicates that AECOM may not have enough cash to cover its short-term liabilities. While the cash ratio has remained low, it is essential to note that this ratio is a more stringent measure and may not necessarily mean a liquidity issue if the company has access to other liquid assets.
Overall, AECOM's liquidity ratios suggest that the company has maintained a satisfactory level of liquidity to meet its short-term obligations. However, close monitoring is advisable, especially with a current ratio close to 1 and a cash ratio consistently below 1. It would be essential for AECOM to manage its working capital effectively to ensure continued liquidity and financial stability.
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 | 23.20 | 18.54 | 21.52 | 24.06 | 26.34 | 45.15 | 49.51 | 51.21 | 51.70 | 53.05 | 56.79 | 30.80 | 70.65 | 66.07 | 75.48 | 61.69 | 72.42 | 44.15 | 31.48 | 27.06 |
The cash conversion cycle of AECOM has fluctuated over the past eight quarters. In Q1 2024, the company's cash conversion cycle was 6.83 days, which decreased from the previous quarter. This indicates that AECOM took approximately 6.83 days to convert its investments in inventory and other resources into cash receipts from customers.
Comparing Q1 2024 to Q2 2022, the trend shows variability with fluctuations in the company's cash conversion cycle. AECOM's cash conversion cycle was highest in Q2 2022 at 12.84 days, which decreased over time before increasing again in Q1 2023. The decrease in the cash conversion cycle from Q2 2022 to Q1 2024 suggests that the company improved its efficiency in managing its working capital and converting investments into cash.
Overall, AECOM's cash conversion cycle has shown variability, but the decreasing trend from Q2 2022 to Q1 2024 may indicate enhanced efficiency in managing operations and liquidity. However, it is essential for the company to monitor and maintain an optimal cash conversion cycle to ensure effective working capital management and sustainable financial health.