Ametek Inc (AME)

Ametek Inc's current ratio has shown a declining trend over the past five years, from 2.34 in 2020 to 0.98 in 2023. This indicates that the company may have difficulties meeting its short-term obligations with its current assets. While a current ratio of 1 or higher is generally considered healthy, Ametek's current ratio has fallen below this benchmark in recent years.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also decreased over the same period. The quick ratio dropped from 1.82 in 2020 to 0.59 in 2023, suggesting that the company may struggle to cover its short-term liabilities without relying on inventory sales.

Furthermore, the cash ratio, which is the most stringent indicator of liquidity, has also shown a decreasing trend for Ametek Inc. The cash ratio declined from 1.27 in 2020 to 0.24 in 2023, indicating that the company's ability to meet immediate obligations solely with cash and cash equivalents has weakened over time.

Overall, based on the declining current, quick, and cash ratios, Ametek Inc's liquidity position appears to have deteriorated over the past few years. This trend may raise concerns about the company's ability to manage its short-term financial obligations and may warrant further investigation into the company's liquidity management strategies.

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Additional liquidity measure

The cash conversion cycle of Ametek Inc has exhibited fluctuating trends over the past five years. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In 2023, the cash conversion cycle increased to 109.41 days from 104.42 days in 2022, indicating that the company took longer to convert its resources into cash, possibly due to slower sales turnover or inventory management issues.

Comparing to previous years, the cycle was significantly higher in 2021 at 84.59 days, showing a longer cash conversion period, which could imply less efficient working capital management. Before 2021, the cycle had been on a declining trend, with 2020 showing the lowest cycle at 72.25 days, demonstrating an improvement in managing cash flows and operational efficiency.

However, the cycle in 2019 was slightly higher at 79.48 days compared to 2020, indicating a slight deterioration in efficiency in that year. Overall, a high cash conversion cycle suggests a longer time for the company to receive cash against its investments, impacting liquidity and potentially indicating areas for operational improvement within the business.