Albemarle Corp (ALB)

Albemarle Corp.'s liquidity ratios indicate its ability to meet short-term obligations. The company's current ratio decreased from 1.89 in 2022 to 1.47 in 2023, suggesting a slight weakening in the ability to cover current liabilities with current assets. However, the current ratio remains above 1, indicating that Albemarle Corp. has sufficient current assets to meet its short-term obligations.

The quick ratio, a more stringent measure of liquidity, also declined from 1.13 in 2022 to 0.86 in 2023. This indicates a potential decrease in the company's ability to quickly cover its current liabilities without relying on inventory. Despite the decrease, the quick ratio above 1 in all years except 2021 still demonstrates a reasonable ability to meet short-term obligations without requiring inventory to be sold off.

The cash ratio, which measures a company's ability to cover current liabilities with only cash and cash equivalents, decreased from 0.61 in 2022 to 0.34 in 2023. This decrease indicates a reduced capacity to meet short-term obligations solely with available cash. However, the cash ratio exceeding 0.5 in every year prior to 2023 suggests that Albemarle Corp. generally maintained a reasonable cushion of cash reserves to address immediate payment needs.

Overall, while there have been fluctuations in Albemarle Corp.'s liquidity ratios over the years, the company generally maintains solid liquidity levels. The declining trend in the ratios in 2023 may warrant further monitoring to ensure the company's ability to meet short-term obligations remains robust.

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See also:

Albemarle Corp Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Albemarle Corp. has shown a declining trend over the past five years, indicating an improvement in managing its cash flows and working capital efficiency. In 2023, the cash conversion cycle decreased to 72.82 days from 74.30 days in 2022.

A shorter cash conversion cycle is generally favorable as it signifies that the company is able to convert its investments in inventory and accounts receivable into cash more quickly. This can result in higher liquidity and improved financial health.

Albemarle Corp.'s decreasing cash conversion cycle suggests better inventory management, quicker collection of receivables, or more efficient payment of payables. This trend indicates the company's ability to operate more efficiently and effectively utilize its resources.

Overall, the decreasing trend in Albemarle Corp.'s cash conversion cycle over the past five years is a positive sign of improved working capital management and efficiency in converting its investments into cash.