Albemarle Corp (ALB)

Albemarle Corp's liquidity ratios have shown fluctuations over the past few years. The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, ranged from a low of 1.06 in December 2021 to a high of 2.84 in March 2024. The ratio has generally been above 1, indicating that the company has had sufficient current assets to cover its current liabilities.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also varied over the period. It ranged from a low of 0.57 in March 2022 to a high of 2.28 in June 2021. The quick ratio generally stayed above 1, suggesting that Albemarle Corp could meet its short-term obligations without relying on inventory liquidation.

The cash ratio, which represents the company's ability to cover its current liabilities with cash and cash equivalents, showed fluctuations as well. The ratio fluctuated between 0.22 in March 2022 and 1.76 in June 2021, indicating the company's ability to cover a varying percentage of its short-term liabilities with cash on hand.

Overall, Albemarle Corp's liquidity ratios indicate that the company has generally maintained a healthy liquidity position, although there have been fluctuations in specific periods. It is important for investors and stakeholders to closely monitor these ratios to ensure the company's continued ability to meet its short-term financial obligations.

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See also:

Albemarle Corp Liquidity Ratios (Quarterly Data)

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Additional liquidity measure

The cash conversion cycle (CCC) is an important measure of a company's efficiency in managing its working capital. It indicates the time it takes for a company to convert its investments in inventory and other inputs into cash flows from sales. A shorter CCC is generally desirable as it signifies faster turnover of cash.

Analyzing Albemarle Corp's CCC over the past few quarters, we can observe fluctuations in the efficiency of its working capital management.

From March 31, 2020, to June 30, 2020, the CCC increased from 106.75 days to 117.49 days, indicating a longer cycle. Subsequently, there was a further increase in the CCC to 125.87 days by September 30, 2020, and a slight decrease to 125.36 days by December 31, 2020, reflecting a potential slowdown in the conversion of investment into cash.

The trend reversed in the following quarters as the CCC decreased to 99.31 days by March 31, 2021, reflecting improved working capital efficiency. This trend continued through June 30, 2021, with a further reduction to 90.83 days, suggesting better management of operating assets and liabilities.

However, from September 30, 2021, to December 31, 2021, the CCC increased to 111.74 days, indicating a potential strain on the company's cash conversion process. It then decreased to 98.58 days by March 31, 2022, before rising again to 107.70 days by June 30, 2022.

The CCC experienced a significant decline to 72.23 days by September 30, 2022, reflecting a notable improvement in working capital efficiency. This positive trend continued through December 31, 2022, with a slight increase to 125.94 days.

However, from March 31, 2023, there was a significant spike in the CCC to 175.86 days, followed by a further increase to 297.81 days by June 30, 2023, indicating potential challenges in managing working capital effectively. Subsequently, there was a decrease to 240.82 days by September 30, 2023, and further improvement to 181.22 days by December 31, 2023.

In the most recent quarters, the CCC decreased to 139.33 days by March 31, 2024, and remained relatively stable around this level through September 30, 2024, with minor fluctuations.

Overall, the analysis of Albemarle Corp's cash conversion cycle highlights periods of both improvement and challenges in managing working capital efficiency. Continued monitoring and potential strategic adjustments may be necessary to optimize the CCC and enhance the company's cash flow management.