Badger Meter Inc (BMI)

Badger Meter Inc's liquidity ratios show a strong financial position in terms of its ability to meet short-term obligations. The current ratio has been consistently above 3 over the reported periods, indicating that the company has more than enough current assets to cover its current liabilities. This suggests a healthy liquidity position.

The quick ratio, which excludes inventory from current assets, also paints a positive picture. Although there is some volatility, the quick ratio has generally been above 1, indicating that Badger Meter has an adequate level of liquid assets to cover its short-term liabilities without relying on selling inventory.

Additionally, the cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, has been consistently above 1 in recent periods. This indicates that Badger Meter has a sufficient amount of cash on hand to cover its immediate liabilities without the need to rely on other current assets.

Overall, based on the liquidity ratios provided, Badger Meter Inc appears to be in a strong financial position with ample liquidity to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Badger Meter Inc has shown fluctuations over the period from March 31, 2020, to December 31, 2024. The trend indicates that the company's ability to efficiently convert its resources into cash has varied during this time frame.

The cash conversion cycle reflects the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cycle is generally preferred as it signifies that the company can collect cash from its sales more quickly and manage its working capital effectively.

In the case of Badger Meter Inc, the cash conversion cycle started at 103.75 days on March 31, 2020, and fluctuated between 100 to 130 days up until September 30, 2022. However, there was a significant increase in the cycle duration in the subsequent periods, extending to 137.75 days on June 30, 2023. This increase could potentially indicate challenges in managing inventory levels, accounts receivable, and accounts payable effectively.

The cycle showed some improvement towards the end of the observed period, with a decrease to 105.24 days on December 31, 2024. This reduction suggests that the company may have implemented strategies to enhance its working capital management and streamline its cash conversion processes.

Overall, closely monitoring and managing the cash conversion cycle is crucial for Badger Meter Inc to ensure efficient operations and healthy cash flows. Analyzing the components contributing to the cycle duration, such as inventory turnover, accounts receivable collection period, and accounts payable payment period, can help identify areas for improvement and optimize the company's liquidity position.