Axalta Coating Systems Ltd (AXTA)

Axalta Coating Systems Ltd's liquidity ratios exhibit a mixed performance over the years.

1. Current Ratio: The company's current ratio demonstrates a slight decline from 2.48 in 2020 to 1.93 in 2021, before stabilizing around 1.93 to 2.01 in the following years. This indicates a level of short-term liquidity to cover current liabilities, although the ratio has hovered below 2 in recent years.

2. Quick Ratio: Axalta's quick ratio experienced a more noticeable decrease from 1.89 in 2020 to 1.33 in 2021 and further to around 1.24 to 1.36 in the subsequent years. The trend suggests a reduced ability to cover immediate liabilities without relying on inventory.

3. Cash Ratio: The company's cash ratio reflects a significant drop from 1.15 in 2020 to 0.63 in 2021, followed by a relatively stable range of 0.44 to 0.49 in the later years. This signifies a lower ability to cover short-term obligations with cash alone, indicating a potential need to manage cash resources more efficiently.

Overall, while Axalta Coating Systems Ltd maintains adequate liquidity to meet current obligations, the decreasing trends in quick and cash ratios highlight a potential need for the company to optimize its current asset management for improved short-term liquidity positions.

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Additional liquidity measure

The cash conversion cycle of Axalta Coating Systems Ltd has shown some fluctuations over the past five years. In 2020, the company's cash conversion cycle stood at 84.48 days, indicating that on average it took the company this many days to convert its invested resources back into cash.

By the end of 2021, the cycle decreased to 78.58 days, suggesting an improvement in the efficiency of the company's operations in terms of managing its cash flows. However, in 2022, there was an increase in the cash conversion cycle to 87.45 days, indicating that it took longer for the company to convert its investments into cash during that period.

This trend continued in 2023, with the cash conversion cycle further lengthening to 90.01 days, indicating potential challenges in managing working capital effectively. By the end of 2024, the cycle increased slightly to 92.19 days, possibly indicating ongoing difficulties in converting investments into cash efficiently.

Overall, it is essential for Axalta Coating Systems Ltd to closely monitor and improve its cash conversion cycle to ensure optimal utilization of resources and maintain healthy liquidity levels in the long run.