AdvanSix Inc (ASIX)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.17 | 1.34 | 1.37 | 1.25 | 1.12 | 1.14 | 1.22 | 1.34 | 1.13 | 1.09 | 1.21 | 1.19 | 1.16 | 1.22 | 1.55 | 1.18 | 1.00 | 1.01 | 1.16 | 1.05 |
| Quick ratio | 0.55 | 0.55 | 0.55 | 0.52 | 0.55 | 0.64 | 0.74 | 0.79 | 0.63 | 0.58 | 0.63 | 0.63 | 0.51 | 0.50 | 0.70 | 0.57 | 0.39 | 0.42 | 0.57 | 0.49 |
| Cash ratio | 0.08 | 0.07 | 0.04 | 0.01 | 0.08 | 0.07 | 0.05 | 0.06 | 0.05 | 0.02 | 0.02 | 0.05 | 0.04 | 0.07 | 0.32 | 0.11 | 0.02 | 0.04 | 0.07 | 0.03 |
The liquidity ratios of AdvanSix Inc, as reflected in the data provided, show the company's ability to meet its short-term obligations.
The current ratio has been fluctuating over the past eight quarters, ranging from a low of 1.12 in Q4 2022 to a high of 1.37 in Q2 2023. Despite the fluctuations, the current ratio has generally remained above 1, indicating that AdvanSix Inc has had sufficient current assets to cover its current liabilities. However, it is important to note that the current ratio decreased in Q4 2023 to 1.17, which may signal a potential liquidity risk.
The quick ratio measures AdvanSix's ability to meet its short-term obligations using only its most liquid assets. The quick ratio has also varied over the quarters, with the lowest value of 0.54 in Q1 2023 and the highest value of 0.81 in Q1 2022. The downward trend seen in the quick ratio over the recent quarters suggests a potential decrease in the company's ability to cover its obligations using only its quick assets.
The cash ratio, representing the most conservative measure of liquidity, has generally been low for AdvanSix Inc, rarely exceeding 0.12. The values have been relatively stable over the quarters, with minor fluctuations. The cash ratio provides insight into the company's ability to meet its short-term liabilities using only cash and cash equivalents, which might indicate a limited ability to pay off immediate obligations.
In conclusion, while the current ratio has typically been above 1, indicating a relative liquidity position, the decreasing trend in the quick ratio and the consistently low cash ratio suggest that AdvanSix Inc may face challenges in meeting its short-term obligations using only its most liquid assets. It is essential for the company to closely monitor its liquidity position and take necessary measures to address any potential liquidity risks.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 28.17 | 34.07 | 34.40 | 34.42 | 22.65 | 15.15 | 21.12 | 37.02 | 21.39 | 19.74 | 26.98 | 34.46 | 39.59 | 32.86 | 40.74 | 23.91 | 16.45 | 13.06 | 17.97 | 16.41 |
The cash conversion cycle of AdvanSix Inc has shown some fluctuations over the past eight quarters. In Q4 2023, the cash conversion cycle was 27.11 days, indicating that the company takes approximately 27 days to convert its investments in raw materials and production into cash from sales. This was a decrease from the previous quarter, Q3 2023, where the cycle was 33.93 days.
Looking further back, the cash conversion cycle was relatively stable in Q2 2023 and Q1 2023 at around 34 days. In comparison, Q4 2022 had a shorter cycle of 21.93 days, showing that the company was more efficient in managing its working capital during that period.
The trend over the past two years reveals some variability in the cash conversion cycle, with a notable increase in Q1 2022 to 36.42 days. This suggests that the company may have faced challenges in managing its inventory, receivables, and payables during that period.
Overall, while there have been fluctuations in the cash conversion cycle of AdvanSix Inc, it is important for the company to focus on optimizing its working capital management to ensure efficiency in converting investments into cash flow from sales. A lower cash conversion cycle generally indicates better working capital management and liquidity for the company.