Brunswick Corporation (BC)

The liquidity ratios of Brunswick Corporation indicate its ability to meet short-term obligations and cover immediate financial needs. The current ratio, which measures current assets against current liabilities, shows a fluctuating trend over the years, ranging from 1.43 to 1.81. While a current ratio above 1 indicates the company can cover its short-term liabilities, the decreasing trend from 2022 to 2024 suggests a potential weakening of short-term liquidity.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, reveals a similar downward trend from 0.25 to 0.21 over the same period. This indicates that Brunswick may have challenges in meeting its short-term obligations using only its most liquid assets.

Furthermore, the cash ratio, which focuses solely on the most liquid assets like cash and cash equivalents to cover current liabilities, shows a consistent level of 0.21 to 0.53 over the years. This indicates that Brunswick may have limited cash reserves relative to its short-term obligations.

Overall, the liquidity ratios of Brunswick Corporation suggest a potential vulnerability in its ability to meet immediate financial needs, especially with the declining trends in the current and quick ratios. Management should closely monitor and enhance the company's liquidity position to ensure its financial stability in the short term.

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Additional liquidity measure

The cash conversion cycle for Brunswick Corporation has shown a gradual but steady increase over the past five years.

As of December 31, 2020, the company's cash conversion cycle stood at 82.89 days, indicating that it took approximately 82.89 days for Brunswick to convert its investments in inventory and other resources into cash from sales.

By the end of December 31, 2024, the cash conversion cycle had extended to 122.34 days, signifying a longer period needed for the conversion of resources into cash. This increase suggests potential challenges in managing working capital efficiently, as the company may be experiencing delays in converting inventory into sales and ultimately into cash.

It is important for Brunswick Corporation to closely monitor and manage its cash conversion cycle to ensure optimal operational efficiency. Analyzing the underlying factors contributing to this prolonged cycle can help the company identify areas for improvement and implement strategies to enhance cash flow and overall profitability.