Autoliv Inc (ALV)

Autoliv Inc's liquidity ratios have shown a declining trend over the years.

The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, decreased from 1.36 in 2020 to 0.96 in 2024. This suggests that Autoliv's short-term liquidity position weakened over the period.

The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, also decreased significantly from 0.37 in 2020 to 0.09 in 2024. This indicates that the company may face challenges in meeting its short-term obligations without relying on inventory, which may be less liquid.

Similarly, the cash ratio, representing the most conservative estimate of liquidity by considering only cash and cash equivalents, decreased from 0.37 in 2020 to 0.09 in 2024. This shows a reduction in Autoliv's ability to pay off its current liabilities solely using cash and cash equivalents.

Overall, the downward trend in Autoliv's liquidity ratios indicates a potential liquidity strain and suggests a need for careful monitoring and management of its short-term liquidity position to ensure the company can meet its financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Autoliv Inc has shown some fluctuations over the past five years. Starting at 46.99 days on December 31, 2020, it decreased to 42.21 days by December 31, 2021. However, by December 31, 2022, it increased to 47.50 days before dropping to 42.68 days by December 31, 2023. The cycle then saw a further reduction to 39.72 days as of December 31, 2024. Overall, Autoliv Inc has managed to improve its cash conversion cycle efficiency over the years, indicating effective management of cash flows and working capital. A lower cash conversion cycle indicates that the company is able to convert its investments in inventory into cash more quickly, which is generally a positive sign for liquidity and operational efficiency.