Air Products and Chemicals Inc (APD)
Liquidity ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.52 | 1.33 | 1.81 | 2.99 | 3.59 |
| Quick ratio | 1.20 | 1.00 | 1.49 | 2.62 | 3.20 |
| Cash ratio | 0.71 | 0.50 | 0.95 | 2.07 | 2.63 |
Air Products and Chemicals Inc's liquidity ratios have exhibited a declining trend over the past five years.
The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has decreased from 3.59 in 2020 to 1.52 in 2024. This indicates that the company may have reduced liquidity in the recent period, as its current assets may be less than its current liabilities.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Air Products and Chemicals Inc's quick ratio also shows a decreasing trend from 3.20 in 2020 to 1.20 in 2024. This implies that the company has become less capable of meeting its short-term obligations with its most liquid assets.
The cash ratio, which is the most conservative measure of liquidity, has also declined over the years, from 2.63 in 2020 to 0.71 in 2024. This ratio indicates the extent to which the company's most liquid assets, cash and cash equivalents, can cover its current liabilities. The decreasing trend suggests that Air Products and Chemicals Inc may have fewer cash reserves available to meet its short-term obligations.
Overall, the declining liquidity ratios of Air Products and Chemicals Inc raise concerns about its ability to easily meet its short-term financial obligations. It is essential for the company to closely monitor its liquidity position and take appropriate measures to improve its liquidity levels in order to maintain financial stability and be prepared for any unexpected challenges in the future.
See also:
Air Products and Chemicals Inc Liquidity Ratios
Additional liquidity measure
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 33.77 | 36.51 | 31.86 | 41.72 | 47.64 |
The cash conversion cycle of Air Products and Chemicals Inc has shown a fluctuating trend over the past five years. In the latest fiscal year, ending on September 30, 2024, the company's cash conversion cycle improved to 33.77 days, a decrease from the previous year's 36.51 days. This indicates that the company was able to manage its cash flow more efficiently in converting resources into cash during the specified period.
Looking back over the years, we see a general improvement in the cash conversion cycle from 47.64 days in 2020 to 33.77 days in 2024. This positive trend suggests that the company has been successful in enhancing its operational efficiency, managing its inventory, receivables, and payables effectively, and optimizing its working capital management processes.
A lower cash conversion cycle signifies that Air Products and Chemicals Inc is taking less time to convert its investments in inventory into cash inflows from sales. This can be beneficial for the company as it indicates a quicker cash turnover, potentially leading to better liquidity and financial health.
Overall, Air Products and Chemicals Inc's improving cash conversion cycle trend demonstrates its ability to efficiently manage its working capital and generate cash flows from its operations, which is a positive indicator for stakeholders and investors.