Broadridge Financial Solutions Inc (BR)

Broadridge Financial Solutions Inc's liquidity ratios have shown mixed performance over the past five years.

The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has fluctuated widely. In 2024, the current ratio improved to 1.08 from the previous year's 0.58, indicating that the company had $1.08 in current assets for every $1 of current liabilities. Despite the improvement, the current ratio remains relatively low compared to 2022 and 2021, suggesting that Broadridge may still have some difficulty meeting its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more rigorous assessment of the company's ability to meet short-term liabilities without relying on inventory. Broadridge's quick ratio has also varied significantly, reaching the lowest point of 0.10 in 2023 and showing a slight improvement in 2024 to 0.21. This indicates that the company may struggle to meet its immediate obligations without relying on the sale of inventory.

The cash ratio, which is the most conservative liquidity measure, focuses solely on the company's ability to cover short-term debt with its cash and cash equivalents. Broadridge's cash ratio has been consistent in recent years, hovering around 0.20. This suggests that the company has a low amount of cash on hand relative to its short-term liabilities, which may indicate some cash flow challenges.

Overall, Broadridge Financial Solutions Inc's liquidity ratios paint a picture of fluctuating liquidity and potential challenges in meeting short-term obligations, particularly without relying on the sale of inventory or additional financing. The company may need to focus on improving its liquidity position to enhance its financial stability and flexibility.

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Additional liquidity measure

The cash conversion cycle of Broadridge Financial Solutions Inc has been fluctuating over the past five years. The company has shown improvement in managing its cash conversion cycle as it decreased significantly from -11.64 days in 2020 to -17.35 days in 2024.

A negative cash conversion cycle indicates that the company is able to collect cash from customers before needing to pay suppliers and vendors, which is generally a positive sign of efficient working capital management.

In 2023, the cash conversion cycle improved to -8.21 days, showing that the company was able to shorten the time it takes to convert its investments in inventory into cash. However, in 2021 and 2022, the company's cash conversion cycle increased to -18.17 days and -14.64 days respectively, before returning to a more efficient level.

Overall, Broadridge Financial Solutions Inc has been successful in managing its cash conversion cycle efficiently, showcasing a trend of improvement over the years, although some fluctuations were observed during the period under review.