Amcor PLC (AMCR)

The liquidity ratios of Amcor PLC, as indicated by the current ratio, quick ratio, and cash ratio over the past five years, show the company's ability to meet its short-term financial obligations.

- The current ratio has been fluctuating slightly over the years, ranging from 1.14 to 1.21. This suggests that Amcor PLC has generally maintained a sufficient level of current assets to cover its current liabilities. However, the ratio has not shown significant improvement or deterioration over the period.

- The quick ratio, which excludes inventory from current assets, has also displayed a similar trend as the current ratio, with values ranging from 0.53 to 0.63. This implies that while the company may have slightly lower liquidity when considering only the most liquid assets, it still appears to have the ability to meet its short-term obligations.

- The cash ratio, which provides a more stringent measure of liquidity by considering only cash and cash equivalents, has shown a decreasing trend from 0.19 to 0.14 over the five-year period. This indicates a decline in the company's immediate ability to cover current liabilities with cash on hand.

Overall, while Amcor PLC has maintained a current ratio above 1, suggesting a healthy liquidity position, the downward trend in the quick ratio and cash ratio warrants monitoring. The decreasing cash ratio may indicate a need for the company to enhance its cash management strategies or closely monitor its cash position to ensure it can meet short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. Amcor PLC's cash conversion cycle has shown some fluctuation over the past five years.

In the most recent year, as of June 30, 2024, the cash conversion cycle increased to 35.23 days, indicating that it took Amcor PLC longer to convert its investments into cash compared to the previous year. This may suggest potential challenges in managing inventory, collecting receivables, or delays in the sales process.

In the prior year, as of June 30, 2023, the cash conversion cycle was at 30.96 days, showing a shorter cycle compared to the latest year. This improvement suggests more efficiency in converting investments into cash during that period.

Looking further back, in June 2022 and June 2021, the cash conversion cycle was 32.19 days and 35.83 days, respectively. These figures indicate fluctuations in the time taken to convert investments into cash during those years.

In June 2020, the cash conversion cycle was 34.85 days, slightly shorter than in some other years but still showing a prolonged process of converting investments into cash.

Overall, fluctuations in Amcor PLC's cash conversion cycle over the past five years may reflect varying efficiency levels in managing working capital components such as inventory, accounts receivable, and accounts payable. It is essential for the company to closely monitor and improve its cash conversion cycle to enhance liquidity and operational effectiveness.