Amentum Holdings Inc. (AMTM)

The liquidity ratios of Amentum Holdings Inc. indicate the company's ability to meet its short-term obligations and cover immediate cash needs.

1. Current Ratio: This ratio measures the company's ability to pay its short-term liabilities with its short-term assets. Amentum Holdings Inc.'s current ratio has shown fluctuations over the periods provided. It increased from 1.40 in September 2023 to a peak of 2.09 in June 2024 before slightly decreasing to 1.59 in December 2024. Generally, a ratio above 1 indicates that the company has more current assets than current liabilities, which is positive for meeting short-term obligations.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from the current assets. Amentum Holdings Inc.'s quick ratio ranged from 0.22 in September 2023 to 0.31 in June 2024 before settling at 0.26 in December 2024. This suggests that the company may have some difficulty in meeting its short-term obligations with its most liquid assets alone.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover current liabilities. Amentum Holdings Inc.'s cash ratio also showed similar trends to the quick ratio, ranging between 0.22 and 0.31 before ending at 0.26 in December 2024. This indicates that the company may have a lower ability to cover its short-term liabilities with its cash on hand compared to the broader measure of quick assets.

In summary, while Amentum Holdings Inc.'s current ratio generally indicates a comfortable position regarding short-term obligations, the lower quick and cash ratios suggest that the company may need to closely manage its liquid assets to ensure it can meet immediate cash needs. Further analysis of the company's cash management and working capital practices may be warranted to enhance its overall liquidity position.

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Additional liquidity measure

Amentum Holdings Inc. has consistently maintained a cash conversion cycle of 0.00 days for the periods provided from September 30, 2023, to December 31, 2024. This implies that the company is efficiently managing its working capital by swiftly converting its investments in inventory into cash from sales without any delay. The cycle duration of 0.00 days indicates that the company is able to collect cash from customers before paying its suppliers, resulting in a highly efficient cash conversion process. This demonstrates strong liquidity management and effective control over the operating cycle, which can support the company's financial stability and growth prospects.