Avery Dennison Corp (AVY)
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 | 1.04 | 1.03 | 1.09 | 1.13 | 0.99 | 1.01 | 0.98 | 1.06 | 1.07 | 1.06 | 1.32 | 1.28 | 1.25 | 1.31 | 1.22 | 1.14 | 1.04 | 1.03 | 1.04 | 1.14 |
| Quick ratio | 0.62 | 0.61 | 0.64 | 0.15 | 0.56 | 0.05 | 0.07 | 0.05 | 0.62 | 0.08 | 0.17 | 0.16 | 0.13 | 0.16 | 0.14 | 0.29 | 0.11 | 0.10 | 0.11 | 0.11 |
| Cash ratio | 0.09 | 0.09 | 0.10 | 0.15 | 0.07 | 0.05 | 0.07 | 0.05 | 0.06 | 0.08 | 0.17 | 0.16 | 0.13 | 0.16 | 0.14 | 0.29 | 0.11 | 0.10 | 0.11 | 0.11 |
Avery Dennison Corp's liquidity ratios indicate its ability to meet short-term financial obligations. The current ratio has varied over the past few quarters, ranging from 0.98 to 1.32. This ratio measures the company's ability to cover its current liabilities with its current assets. Generally, a current ratio above 1 signifies a healthy liquidity position, indicating that the company has sufficient current assets to cover its short-term obligations.
In contrast, the quick ratio has fluctuated significantly, ranging from 0.05 to 0.64. The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets. A quick ratio below 1 may suggest that the company may have difficulty meeting its immediate liabilities without relying on selling inventory.
The cash ratio, which reflects the company's ability to cover current liabilities with its most liquid assets, has also shown variability, ranging from 0.05 to 0.29. A higher cash ratio is generally preferred, as it indicates that the company has a higher proportion of cash and cash equivalents to cover its short-term obligations.
Overall, while the current ratio for Avery Dennison Corp has generally been above 1, indicating a reasonable liquidity position, the fluctuating quick and cash ratios suggest some variability in the company's ability to quickly access cash to meet its short-term obligations. Monitoring these ratios over time can provide insights into the company's liquidity management and financial health.
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 | 44.40 | 46.68 | 49.14 | -9.04 | 41.09 | -16.50 | -19.37 | -19.48 | 43.01 | -19.83 | -21.44 | -22.44 | -19.87 | -16.49 | -13.91 | -17.97 | -21.95 | -17.91 | -18.93 | -17.55 |
The cash conversion cycle of Avery Dennison Corp has fluctuated over the past several quarters, indicating variations in its working capital management efficiency.
From March 2019 to March 2020, the company consistently had negative cash conversion cycles, suggesting efficient management of cash, receivables, and inventory. However, this changed in June 2020 when the cash conversion cycle turned positive, indicating a delay in the conversion of cash spent on inventory back into cash from sales.
The cycle remained positive from June 2020 to March 2021, indicating potential challenges in managing working capital efficiently during this period. Subsequently, from June 2021 to June 2022, the company improved its working capital management significantly, evident from the negative cycle values.
However, from September 2022 to June 2023, the cash conversion cycle increased, reaching its highest point in June 2023. This may suggest potential challenges in the company's ability to efficiently convert its investments in raw materials into cash from sales during this period.
Overall, Avery Dennison Corp's cash conversion cycle reveals fluctuations that indicate varying degrees of efficiency in managing cash, receivables, and inventory over the analyzed periods. Continued monitoring and potential adjustments may be necessary to optimize working capital management in the future.