Brady Corporation (BRC)

The liquidity ratios for Brady Corporation over the specified periods reveal a trend of progressive improvement from July 31, 2021, through July 31, 2024, followed by a significant decline in 2025.

Current Ratio: The current ratio exhibits a steady upward trajectory during the initial years, increasing from 1.81 in 2021 to 2.03 in 2023. This indicates an enhancement in the company's short-term liquidity position, suggesting that Brady has increased its ability to cover current liabilities with current assets. The ratio further improves to 2.27 in 2024, reflecting a strong liquidity buffer. However, a sharp decline to 0.03 is observed in 2025, indicating a drastic reduction in current assets relative to current liabilities, potentially signaling severe liquidity issues or a significant change in asset management or liabilities structure.

Quick Ratio: The quick ratio, which excludes inventory from current assets, also shows consistent growth from 1.23 in 2021 to 1.30 in 2023, reaching 1.65 in 2024. This indicates an improved position of liquid assets relative to current liabilities, emphasizing solvency without reliance on inventory liquidation. In 2025, the quick ratio decreases slightly to 1.23, but remains above 1, maintaining a comfortable margin of liquidity without inventory considerations.

Cash Ratio: The cash ratio, representing the proportion of cash and cash equivalents to current liabilities, follows a similar trend of enhancement, increasing from 0.57 in 2021 to 0.59 in 2023, and then significantly rising to 0.94 in 2024. This indicates that Brady substantially increased its cash reserves relative to current obligations during this period. However, in 2025, the cash ratio declines to 0.53, reflecting a reduction in cash holdings but still maintaining over half of current liabilities covered by cash.

Overall, the analyzed liquidity ratios demonstrate a period of strengthening liquidity positions up to 2024, with significant increases in all three measures. The substantial decline in 2025 across all ratios suggests potential liquidity concerns, possibly due to asset depletions, increased liabilities, or operational shifts. The company's liquidity health appears solid through 2024 but warrants closer attention to the causes and implications of the sharp deterioration in 2025 ratios.

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Additional liquidity measure

The cash conversion cycle (CCC) for Brady Corporation has demonstrated notable fluctuations over the analyzed period from July 31, 2021, to July 31, 2025. Starting at 88.16 days in 2021, the cycle increased significantly to 110.65 days in 2022, indicating a lengthening of the period between cash outflows for inventory and receivables inflows. In 2023, the CCC slightly decreased to 103.15 days, suggesting a partial improvement, but it remained elevated compared to 2021 levels. A subsequent reduction occurred in 2024, with the CCC diminishing to 88.47 days, nearly returning to the 2021 baseline and signaling enhanced operational efficiency or improved working capital management.

However, the most remarkable change is observed in 2025, where the CCC sharply declined to 9.44 days. This substantial decrease implies a significant acceleration in the company's cash cycle, possibly due to more efficient inventory turnover, faster collection of receivables, or provisions that shorten the overall period between cash disbursements and receipts.

Overall, the trend indicates a period of increased working capital tied-up in cycles during 2022 and 2023, followed by a strategic or operational turnaround that substantially compressed the cash conversion cycle by 2025. This trend suggests improved liquidity management and operational efficiencies, which could positively impact the company's cash flow and financial health moving forward.