AdvanSix Inc (ASIX)

AdvanSix Inc's liquidity ratios indicate its ability to meet short-term obligations and manage its current assets effectively. The current ratio has been relatively stable over the years, ranging from 1.08 to 1.17. While a current ratio above 1 indicates that the company has sufficient current assets to cover its current liabilities, a decreasing trend in the current ratio over time may signal potential challenges in meeting short-term obligations.

The quick ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. AdvanSix's quick ratio has ranged from 0.04 to 0.08, with fluctuations observed over the years. A quick ratio below 1 suggests that the company may have difficulty in meeting its short-term liabilities without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, focuses solely on cash and cash equivalents. AdvanSix's cash ratio has also shown variability, ranging from 0.04 to 0.08. A cash ratio below 1 implies that the company may need to rely on sources other than cash reserves to meet its short-term obligations.

Overall, while the company's liquidity ratios demonstrate some level of liquidity, the fluctuations in the quick ratio and cash ratio suggest potential challenges in managing short-term obligations solely from current assets and cash reserves. Monitoring these ratios closely will be essential for ensuring the company's liquidity position remains stable in the future.

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Additional liquidity measure

The cash conversion cycle of AdvanSix Inc has shown fluctuations over the years based on the provided data.

As of December 31, 2020, the company had a cash conversion cycle of 64.18 days, indicating that it took approximately 64 days for AdvanSix to convert its investments in inventory and accounts receivable into cash.

By December 31, 2021, the cash conversion cycle decreased to 38.70 days, reflecting an improvement in the company's efficiency in converting its assets into cash.

However, by the end of December 31, 2022, the cash conversion cycle increased to 48.22 days, suggesting a slight slowdown in the company's ability to convert its assets into cash compared to the previous year.

Subsequently, as of December 31, 2023, the cash conversion cycle rose further to 56.50 days, indicating a lengthening in the time taken by AdvanSix to convert its investments into cash.

Finally, by December 31, 2024, the cash conversion cycle remained elevated at 56.81 days, signaling a continued challenge for AdvanSix in efficiently converting its assets into cash over the period analyzed.

Overall, the trend in AdvanSix's cash conversion cycle highlights fluctuations in the company's working capital management effectiveness, with a mix of improvements and challenges in converting investments into cash over the five-year period.