Alamo Group Inc (ALG)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 4.51 3.76 3.82 3.18 3.20
Quick ratio 1.04 0.24 0.25 0.22 0.32
Cash ratio 1.04 0.24 0.25 0.22 0.32

Alamo Group Inc's current ratio has shown a stable trend over the years, starting at 3.20 in 2020 and gradually increasing to 4.51 in 2024. This indicates that the company has more than enough current assets to cover its current liabilities, suggesting a strong liquidity position.

On the other hand, the quick ratio, which measures the company's ability to meet short-term obligations with its most liquid assets, reveals a less favorable trend. It shows a decline from 0.32 in 2020 to 0.24 in 2023 before a sudden increase to 1.04 in 2024. This indicates a fluctuating ability to meet short-term obligations without relying on inventory.

Analyzing the cash ratio, which specifically focuses on the ability to cover current liabilities with cash and cash equivalents, we observe a similar trend to the quick ratio. It starts at 0.32 in 2020, decreases to 0.24 in 2023, and then sharply increases to 1.04 in 2024, signaling an improvement in the company's cash position as a percentage of current liabilities.

In summary, while Alamo Group Inc has maintained a strong current ratio throughout the years, showing ample liquidity to cover short-term obligations, the quick ratio and cash ratio indicate some volatility in the company's ability to quickly meet its short-term liabilities with its most liquid assets, particularly noticeable in 2023 before a significant improvement in 2024.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 103.06 111.47 113.17 117.17 96.33

Based on the provided data, the cash conversion cycle of Alamo Group Inc has shown some fluctuation over the years.

In 2020, the cash conversion cycle was 96.33 days, indicating that it took the company approximately 96 days to convert its investments in inventory and other resources into cash received from sales.

By the end of 2021, the cash conversion cycle had increased to 117.17 days, suggesting that the company took longer to convert its resources into cash during that period.

However, in 2022, there was a slight decrease in the cash conversion cycle to 113.17 days, followed by a further decrease to 111.47 days by the end of 2023. These improvements indicate that the company managed its working capital more efficiently in those years.

In the most recent year, 2024, the cash conversion cycle improved further to 103.06 days, demonstrating a more efficient management of inventory, accounts receivable, and accounts payable.

Overall, a lower cash conversion cycle indicates that the company is managing its working capital effectively, while a higher cycle may suggest inefficiencies or challenges in converting resources into cash flow.