Autoliv Inc (ALV)

Autoliv Inc.'s liquidity ratios have shown a decreasing trend over the past five years.

The current ratio, which measures the company's ability to pay its short-term obligations with its current assets, has decreased from 1.25 in 2019 to 0.98 in 2023. This indicates that Autoliv Inc. may be facing challenges in meeting its short-term obligations with its current asset base.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Autoliv Inc.'s quick ratio has also declined from 0.94 in 2019 to 0.73 in 2023, suggesting a decreasing ability to cover its short-term liabilities without relying on selling inventory.

Furthermore, the cash ratio, which measures the company's ability to cover its short-term liabilities with cash and cash equivalents, has exhibited a downward trend as well, from 0.25 in 2019 to 0.17 in 2023. This indicates that Autoliv Inc. may have a reduced capacity to settle its short-term obligations solely with cash holdings.

Overall, the declining trend in Autoliv Inc.'s liquidity ratios over the past five years raises concerns about the company's short-term financial health and its ability to meet its immediate financial obligations.

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Additional liquidity measure

The cash conversion cycle of Autoliv Inc. has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle was 37.94 days, indicating an improvement compared to the previous year. This suggests that Autoliv has been more efficient in managing its cash, inventory, and receivables during the year.

In 2022, the cash conversion cycle increased to 45.50 days from 58.27 days in 2021, indicating that the company took longer to convert its investments in inventory and receivables into cash. This could be a result of inventory management challenges or slower collection of receivables during the year.

The cash conversion cycle further deteriorated to 66.23 days in 2020, marking a significant increase from 60.12 days in 2019. This suggests that Autoliv faced challenges in managing its working capital efficiently, leading to a longer cash conversion cycle.

Overall, Autoliv's cash conversion cycle has shown fluctuations over the past five years, with improvements in some years and deteriorations in others. It is essential for the company to focus on optimizing its working capital management to ensure a more consistent and efficient cash conversion cycle in the future.