Brady Corporation (BRC)

Brady Corporation's liquidity ratios have shown fluctuations over the past five years.

The current ratio, which measures the company's ability to cover its short-term obligations with its short-term assets, has generally been above 1, indicating a healthy liquidity position. The ratio has been increasing over the years from 1.81 in 2021 to 2.27 in 2024, suggesting an improvement in the company's short-term liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Brady Corporation's quick ratio has also shown an upward trend, from 1.23 in 2021 to 1.65 in 2024. This indicates that the company has an increasing ability to meet its short-term obligations using its most liquid assets.

The cash ratio, which focuses solely on the ability to cover short-term liabilities with cash and equivalents, has varied significantly over the years. It dropped from 1.17 in 2020 to 0.45 in 2022 but then increased to 0.94 in 2024. While the cash ratio remains below 1, suggesting the company may not have enough cash on hand to cover its current liabilities, the upward trend indicates an improving cash position.

Overall, Brady Corporation's liquidity ratios show a generally positive trend, with improvements in the current, quick, and cash ratios over the years. This suggests that the company has been managing its liquidity effectively, which is essential for meeting its short-term financial obligations and supporting ongoing operations.

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Additional liquidity measure

The cash conversion cycle of Brady Corporation has shown a decreasing trend over the past five years. As of July 31, 2024, the company's cash conversion cycle stands at 74.36 days, down from 84.10 days in the prior year and significantly lower than the 97.63 days recorded in July 2020.

This favorable trend suggests that Brady Corporation has been able to improve its efficiency in managing its working capital. The company appears to be converting its investments in inventory and accounts receivable into cash more quickly, which indicates effective management of its operating cycle.

A shorter cash conversion cycle indicates that Brady Corporation is able to generate cash more rapidly from its operational activities, which can enhance liquidity and financial performance. Overall, the decreasing trend in the cash conversion cycle reflects operational efficiency and effective working capital management within the company.