Berry Global Group Inc (BERY)

Based on the data provided for Berry Global Group Inc's liquidity ratios over the past five years, we can observe the following trends:

1. Current Ratio:
The current ratio measures the company's ability to cover its short-term obligations with its current assets. Berry Global Group Inc's current ratio has shown a declining trend over the past five years, from 1.75 in 2020 to 1.25 in 2024. While the current ratio remains above 1, indicating that the company has more current assets than current liabilities, the decreasing trend suggests a potential weakening liquidity position.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Similarly to the current ratio, Berry Global Group Inc's quick ratio has also decreased over the past five years, from 1.02 in 2020 to 0.74 in 2024. This indicates that the company may have a lower ability to meet its short-term liabilities using its most liquid assets.

3. Cash Ratio:
The cash ratio specifically focuses on the company's ability to cover its current liabilities using only cash and cash equivalents. Berry Global Group Inc's cash ratio has also declined over the five-year period, from 0.34 in 2020 to 0.30 in 2024. This decreasing trend suggests that the company may have reduced cash reserves relative to its current liabilities over time.

Overall, the declining trend in all three liquidity ratios indicates that Berry Global Group Inc's liquidity position may have weakened over the past five years. It is important for investors and stakeholders to carefully monitor these ratios to assess the company's ability to meet its short-term financial obligations and manage liquidity risk effectively.

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Additional liquidity measure

The cash conversion cycle for Berry Global Group Inc has exhibited a fluctuating trend over the past five years. In the fiscal year ending September 30, 2024, the company's cash conversion cycle decreased to 43.41 days, which indicates improved efficiency in converting investments in inventory into cash receipts from sales. This decrease in the cash conversion cycle may suggest that Berry Global Group Inc has been managing its inventory, accounts receivable, and accounts payable more effectively, resulting in a shorter time period for the company to receive cash from its operational activities.

Comparing this to the prior year, the cash conversion cycle was 46.11 days in September 2023, pointing to a notable improvement in the company's working capital management. In the preceding years, the cash conversion cycle remained relatively stable, with slight fluctuations noted. The cycle was 44.95 days in 2022 and 45.64 days in 2021, indicating consistent management of working capital efficiency during those periods.

However, in September 2020, the cash conversion cycle increased to 51.14 days, suggesting a temporary inefficiency in the company's working capital management, possibly due to challenges in inventory turnover or delays in cash collection.

Overall, Berry Global Group Inc's cash conversion cycle has shown a positive trend in recent years, with a more recent decrease indicating improved efficiency in managing working capital components. Monitoring and sustaining this downward trajectory can further enhance the company's financial performance and liquidity position.