Adient PLC (ADNT)

The current ratio for Adient plc has been trending downwards over the past five years, indicating a potential decrease in the company's short-term liquidity. However, the ratio remains above 1, suggesting that Adient plc has adequate current assets to cover its current liabilities.

The quick ratio has also shown a declining trend, which may raise concerns about the company's ability to meet its short-term obligations without relying on inventory. However, similar to the current ratio, the quick ratio has remained above 1, indicating a relatively healthy liquidity position.

The cash ratio, while lower than the current and quick ratios, has also exhibited a decreasing trend over the five-year period. This suggests that the company may have a lower level of cash and cash equivalents relative to its current liabilities.

Overall, these liquidity ratios indicate that Adient plc may have experienced a slight decrease in its short-term liquidity position over the past five years, although the ratios remain above the critical threshold of 1, implying that the company has sufficient current assets to cover its short-term obligations.

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Additional liquidity measure

The cash conversion cycle (CCC) measures the time it takes for a company to convert its investments in inventory and other resources into cash from sales. A lower CCC indicates a more efficient use of resources and faster conversion of inventory into cash.

In the case of Adient plc, the trend in the CCC over the past five years shows significant fluctuations. In 2019, the CCC was negative, indicating that Adient was able to convert its inventory into cash quickly and efficiently. However, in 2022, the CCC increased to 6.06, suggesting a longer time to convert inventory into cash, which may be attributed to challenges in inventory management or sales collection.

In 2023, the CCC decreased to 1.61, indicating an improvement in the company's ability to convert inventory into cash and manage its working capital more effectively. This suggests that Adient plc has made improvements in its inventory and sales management processes, leading to a more efficient cash conversion cycle.

Overall, the downward trend in the CCC from 2022 to 2023 is a positive sign, indicating potential improvements in working capital management and the efficient conversion of inventory into cash, which may positively impact the company's liquidity and operational efficiency.