Belden Inc (BDC)

The liquidity ratios for Belden Inc have shown a relatively stable trend over the past five years based on the data provided.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Belden Inc's current ratio has fluctuated between 1.91 and 2.40 over the past five years, with the most recent ratio standing at 2.30 as of December 31, 2023. This indicates that the company has maintained a strong ability to meet its short-term obligations with its current assets.

2. Quick Ratio: The quick ratio, or acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Belden Inc's quick ratio has ranged from 1.07 to 1.87 over the same period, with the latest figure at 1.72 as of December 31, 2023. This suggests that the company has a solid ability to cover its short-term liabilities without relying on inventory.

3. Cash Ratio: The cash ratio focuses solely on the company's ability to pay off its current liabilities with cash and cash equivalents. Belden Inc's cash ratio has varied between 0.60 and 1.18 in the past five years, with the most recent reading at 1.07 as of December 31, 2023. This shows that the company has improved its liquidity position in terms of cash holdings over the years.

Overall, Belden Inc appears to have maintained a healthy liquidity position as indicated by its current, quick, and cash ratios. The company has shown consistency and stability in its ability to meet short-term obligations and manage liquidity effectively over the years.

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Additional liquidity measure

The cash conversion cycle for Belden Inc has shown some variability over the past five years. In 2023, the company's cash conversion cycle was 65.70 days, indicating that on average, it takes Belden 65.70 days to convert its investments in inventory and other resources into cash flow from sales and then back into cash.

Compared to the previous year, the cash conversion cycle increased from 59.80 days in 2022 to 65.70 days in 2023, showing a potential inefficiency in managing working capital during the year. However, when looking at a longer-term trend, the cash conversion cycle has generally increased since 2019, when it stood at 47.18 days.

The cash conversion cycle is a measure of operational efficiency and liquidity management. A longer cycle indicates that Belden is taking more time to turn its investments into cash, which may tie up capital and impact profitability. Management should aim to optimize inventory management, accounts receivable collection, and accounts payable payment to reduce the cash conversion cycle and enhance overall liquidity.