Api Group Corp (APG)

The liquidity ratios of Api Group Corp over the specified periods demonstrate a general pattern of fluctuation with an overall trend towards modest decline in recent years.

Current Ratio:
The current ratio indicates the company's capacity to meet short-term obligations with short-term assets. Between June 30, 2020, and September 30, 2021, the current ratio increased from 1.70 to a peak of 2.83, suggesting improving liquidity. However, post-September 2021, the ratio exhibits a downward trend, declining to 1.38 by December 31, 2022, and stabilizing in the range of approximately 1.35 to 1.53 through March 2025. Despite this decrease, the ratio remains above 1.4 at the most recent date, indicating that the company generally maintains sufficient current assets to cover current liabilities, albeit with less margin than earlier periods.

Quick Ratio:
The quick ratio, which excludes inventory and other less liquid assets, follows a pattern akin to the current ratio. It shows an increase from 1.54 on June 30, 2020, to a high of 2.62 on September 30, 2021, reflecting improved liquidity excluding inventories. Subsequently, the ratio declines, reaching approximately 1.24 by December 31, 2022, and fluctuates slightly thereafter, maintaining levels around 1.19 to 1.34 through March 2025. This indicates that, even with reduced buffers, the company retains sufficient liquid assets to cover immediate liabilities, though with narrower margins.

Cash Ratio:
The cash ratio, representing the most conservative measure of liquidity, exhibits significant variability. It increased from 0.46 on June 30, 2020, to a high of 1.42 on September 30, 2021, and remained above 1 for several periods, notably at 1.37 during December 2021. After this peak, the ratio declines sharply to below 0.30 by March 2022, remaining relatively low in subsequent periods, with a slight increase toward 0.26 in late 2024 and early 2025. This trend suggests that while the company had strong immediate liquidity in earlier periods, its cash holdings relative to current liabilities have substantially diminished over time, potentially reflecting strategic shifts in cash management or operational considerations.

Overall Assessment:
The analysis of liquidity ratios indicates that Api Group Corp experienced a period of strong liquidity in the fiscal year 2020 and up to September 2021, characterized by high current and quick ratios, and notably high cash ratios. Following this period, liquidity measures generally declined, but most ratios remain above critical thresholds associated with liquidity concerns. The current and quick ratios suggest the company continues to possess a sufficient capacity to meet short-term obligations, albeit with decreasing buffers. The decline in the cash ratio underscores a reduction in cash holdings relative to liabilities, potentially indicating a shift towards reliance on non-cash assets or operational efficiencies. The variability and downward trend in these ratios warrant continued monitoring to ensure liquidity remains adequate relative to the company’s operational needs and financial commitments.

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Additional liquidity measure

The cash conversion cycle (CCC) of Api Group Corp reflects fluctuating operational efficiency over the presented periods. Starting at 73.30 days as of June 30, 2020, the CCC experienced an increase reaching a peak of approximately 103.43 days by March 31, 2022. This elevation indicates a longer duration to convert investments in inventory and receivables into cash, suggesting potential challenges in receivables collection or inventory management during that period. Subsequently, the CCC declined to around 73.98 days at the end of 2022 and maintained a relatively stable range thereafter, oscillating between approximately 70 and 79 days through 2023 and into early 2024. The slight rises and falls during this period point to modest variations in operational efficiency without drastic shifts. As of June 30, 2024, the CCC stood at 77.06 days, which is marginally higher than earlier years but within a consistent range. The latest data from September 30, 2024, shows a CCC of 78.11 days, followed by a decrease to 72.53 days by December 31, 2024, and a slight further reduction to 72.10 days as of March 31, 2025. Overall, the company's cash conversion cycle demonstrates a pattern of initial variability, peaking around early 2022, followed by a stabilization phase with only modest fluctuations, suggesting improved or stabilized operational efficiencies in managing cash flow components over the recent periods.