Belden Inc (BDC)

Belden Inc's liquidity ratios indicate its ability to meet short-term obligations and cover immediate financial needs.

The current ratio, which measures the company's ability to cover current liabilities with current assets, has been consistently above 1 over the years, reflecting a healthy liquidity position. The ratio has shown a slight improvement from 2.11 in 2020 to 2.40 in 2022 before decreasing to 1.92 in 2024. Generally, a current ratio above 2 is considered favorable as it suggests the company can easily pay off its short-term debts.

The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity as it excludes inventory from current assets. Belden Inc's quick ratio has fluctuated between 1.25 and 1.76 over the years, indicating a moderate ability to meet short-term obligations without relying on selling inventory. A ratio above 1 is typically preferred, suggesting that the company has an adequate level of liquid assets to cover its immediate liabilities.

The cash ratio, which focuses solely on cash and cash equivalents compared to current liabilities, reveals Belden Inc's capacity to settle obligations using its most liquid assets. The cash ratio has ranged from 0.59 to 1.07, with a notable increase in 2022 before declining in 2024. While a cash ratio above 1 indicates a conservative liquidity position, the company has maintained a reasonable level of cash reserves relative to its short-term liabilities.

Overall, Belden Inc's liquidity ratios suggest that the company has generally maintained a solid liquidity position over the years, with adequate short-term resources to meet its financial obligations. However, the declining trend in some ratios, such as the current and cash ratios in 2024, may warrant further monitoring to ensure continued liquidity stability.

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Additional liquidity measure

The cash conversion cycle of Belden Inc has shown some fluctuation over the years.

- In December 31, 2020, the cash conversion cycle was 62.82 days, indicating that on average, it takes the company approximately 62.82 days to convert its investments in inventory into cash.
- By December 31, 2021, the cash conversion cycle decreased to 53.05 days, suggesting an improvement in the efficiency of Belden Inc's working capital management.
- However, the cycle increased slightly to 59.80 days by December 31, 2022, possibly indicating a slowdown in the company's ability to convert its resources into cash.
- Subsequently, by December 31, 2023, the cash conversion cycle increased further to 65.70 days, which might imply challenges in managing the company's cash flow and working capital effectively.
- As of December 31, 2024, the cycle increased slightly to 67.26 days, potentially pointing to a need for Belden Inc to optimize its operating cycle and enhance its cash flow management practices.

Overall, monitoring the cash conversion cycle is essential for assessing a company's efficiency in managing its working capital and identifying areas for improvement in cash flow management.