Avery Dennison Corp (AVY)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Current ratio 1.08 0.92 0.90 0.87 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
Quick ratio 0.11 0.08 0.07 0.07 0.09 0.09 0.10 0.15 0.07 0.05 0.07 0.07 0.08 0.09 0.18 0.18 0.15 0.17 0.15 0.30
Cash ratio 0.11 0.08 0.07 0.07 0.09 0.09 0.10 0.15 0.07 0.05 0.07 0.07 0.08 0.09 0.18 0.18 0.15 0.17 0.15 0.30

Avery Dennison Corp's liquidity ratios have shown fluctuations over the past few years.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been somewhat volatile. The ratio was relatively stable around 1.2 from June 2020 to June 2022, indicating a healthy level of liquidity. However, there was a noticeable decline in the current ratio from September 2022 to June 2024, falling below 1. This suggests that the company may be facing challenges in meeting its short-term obligations with its current assets during this period.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio exhibited fluctuations over the years. It was generally low, ranging from 0.05 to 0.18, indicating a limited ability to cover short-term obligations with the most liquid assets. The ratio showed some improvement in the first half of 2023 but decreased again by the end of 2024.

The cash ratio, another liquidity metric that focuses solely on cash and cash equivalents to cover current liabilities, followed a similar trend as the quick ratio. It ranged between 0.05 and 0.18, showing a limited cash buffer to meet short-term obligations.

Overall, the liquidity ratios of Avery Dennison Corp indicate a need for careful monitoring of its liquidity position, especially in terms of managing short-term obligations effectively during periods of fluctuations in current assets. Management should consider strategies to improve liquidity, such as optimizing working capital management and maintaining adequate cash reserves, to ensure the company's financial stability and ability to meet its obligations in a timely manner.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Cash conversion cycle days 57.35 60.02 58.45 58.35 55.21 56.03 57.54 59.45 55.56 55.20 55.37 55.24 54.32 54.23 53.33 54.54 51.86 49.19 53.45 51.47

The cash conversion cycle of Avery Dennison Corp has shown some fluctuations over the past few years, ranging from a low of 49.19 days to a high of 60.02 days. The trend indicates that the company's efficiency in converting its resources into cash has fluctuated over time.

On average, the cash conversion cycle has been around 54 days, suggesting that it takes the company approximately 54 days to convert its investments in inventory and receivables into cash flow from sales. A longer cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or extending payment terms to suppliers.

It is essential for Avery Dennison Corp to closely monitor and potentially optimize its cash conversion cycle to ensure efficient use of its resources and maintain healthy cash flows. Strategies such as improving inventory turnover, optimizing credit policies, and streamlining the supply chain could help in reducing the cash conversion cycle and enhancing overall financial performance.