AGCO Corporation (AGCO)

AGCO Corporation's liquidity ratios show a mixed trend over the five-year period from 2020 to 2024. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, improved from 1.30 in 2020 to 1.46 in 2023 before slightly decreasing to 1.34 in 2024. This indicates that AGCO Corporation's short-term liquidity position strengthened over the period, albeit with a slight decline in the most recent year.

On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, declined from 0.72 in 2020 to 0.49 in both 2023 and 2024. This downward trend suggests that AGCO Corporation may have had some challenges in meeting its short-term obligations with its most liquid assets over the years.

Furthermore, the cash ratio, which represents the proportion of current liabilities that could be covered by cash and cash equivalents alone, also decreased from 0.46 in 2020 to 0.16 in 2024. This indicates a significant reduction in AGCO Corporation's ability to cover its short-term liabilities with cash assets only, which may raise concerns about the company's cash management practices or potential liquidity constraints.

Overall, while AGCO Corporation's current ratio shows an improving liquidity position, the decline in the quick ratio and cash ratio signals some challenges in effectively managing short-term liquidity and meeting immediate financial obligations.

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Additional liquidity measure

AGCO Corporation's cash conversion cycle has shown a fluctuating trend over the last five years. The cycle increased from 66.93 days at the end of December 2020 to 73.08 days by December 2021. Subsequently, it further extended to 77.83 days by the end of December 2022. The trend continued as the cycle significantly rose to 107.69 days by December 2023, indicating a potential slowdown in the company's ability to convert its resources into cash efficiently. However, by the end of December 2024, there was a marginal improvement as the cash conversion cycle reduced slightly to 106.82 days. Overall, the increasing trend in the cash conversion cycle may suggest potential inefficiencies within AGCO Corporation's operations, affecting its cash flow and liquidity management.