Ashland Global Holdings Inc (ASH)
Liquidity ratios
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.30 | 3.20 | 1.84 | 1.90 | 1.89 |
| Quick ratio | 1.82 | 2.01 | 0.66 | 1.17 | 0.97 |
| Cash ratio | 1.08 | 1.28 | 0.26 | 0.60 | 0.34 |
The liquidity ratios of Ashland Inc demonstrate the company's ability to meet its short-term obligations and manage its current assets effectively. The current ratio, which measures the company's ability to pay its short-term liabilities with its current assets, has shown a consistent improvement over the past five years, reaching a high of 3.30 in September 2023.
Similarly, the quick ratio, which provides a more conservative assessment of liquidity by excluding inventory from current assets, also indicates a positive trend, with the ratio increasing to 2.06 in September 2022 before slightly declining to 1.93 in September 2023.
The cash ratio, which focuses solely on the most liquid assets, presents a more conservative view of liquidity. The company's cash ratio has shown significant improvement over the years, reaching 1.33 in September 2022 and further increasing to 1.19 in September 2023.
Overall, Ashland Inc's liquidity ratios demonstrate a strong ability to meet short-term obligations and manage its current assets efficiently, reflecting positively on the company's financial stability and ability to weather unforeseen challenges.
Additional liquidity measure
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 156.01 | 146.48 | 123.83 | 161.26 | 150.98 |
The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash from sales. A shorter cash conversion cycle indicates more efficient management of working capital.
Ashland Inc's cash conversion cycle has fluctuated over the past five years, with values ranging from 183.61 days to 208.44 days. In the most recent period ending on September 30, 2023, the cash conversion cycle was 206.33 days.
While the trend shows some variability, the company's cash conversion cycle has generally remained relatively stable over the years. This suggests that Ashland Inc has been consistent in managing its inventory, accounts receivable, and accounts payable efficiently.
However, it's important for the company to closely monitor and manage its cash conversion cycle to ensure that working capital is optimally utilized and to potentially identify opportunities for improvement in operational efficiency.