Badger Meter Inc (BMI)

Badger Meter Inc. has shown a consistently strong liquidity position over the past five years, as indicated by its current ratio, quick ratio, and cash ratio.

The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. Badger Meter's current ratio has ranged from 3.15 to 3.50 over the period, with the latest ratio standing at 3.35. This implies that the company has more than enough current assets to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Badger Meter's quick ratio has varied from 1.97 to 2.19, with the latest figure at 2.19. This indicates that the company has a solid ability to meet its short-term liabilities using its most liquid assets.

The cash ratio focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents. Badger Meter's cash ratio has improved over the years, reaching 1.55 at the end of 2023. This suggests that the company has increased liquidity in terms of cash to fulfill its short-term obligations.

Overall, Badger Meter Inc.'s liquidity ratios reflect a healthy financial position, with ample resources to meet its short-term financial commitments. This robust liquidity profile provides the company with financial flexibility and stability, which is crucial for sustaining operations and pursuing growth opportunities in the future.

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Additional liquidity measure

The cash conversion cycle of Badger Meter Inc. has displayed fluctuations over the past five years. In 2023, the company's cash conversion cycle increased slightly to 104.73 days compared to 100.60 days in 2022. This indicates that Badger Meter took slightly longer to convert its investments in inventory back into cash during the most recent year.

However, when compared to 2021 and 2020, there was an improvement in the cash conversion cycle, as it decreased from 117.92 days in 2021 to 119.11 days in 2020. This suggests that the company became more efficient in managing its working capital during this period.

Moreover, looking back to 2019, the cash conversion cycle was 123.24 days, indicating that the company has made progress in streamlining its operational processes over the past five years.

Overall, while there have been fluctuations in Badger Meter's cash conversion cycle, the general trend seems to show a positive direction in terms of working capital management efficiency.