Brady Corporation (BRC)

The liquidity ratios of Brady Corporation over the specified period demonstrate a relatively stable but varied liquidity position.

Starting with the current ratio, which measures the company's ability to cover its short-term obligations with its current assets, the ratio was consistently above 2.0 from October 2020 through October 2023, indicating strong liquidity levels. The ratio peaked at 2.81 in January and April 2021, and remained above 2.0 until late 2024, with some fluctuations. Notably, it declined to 1.84 in October 2024 before recovering slightly to 2.13 in January 2025. The current ratio's general trend shows a slight decrease beginning in late 2023, moving closer to 1.84, which is still within acceptable liquidity standards but indicates a mild tightening of liquidity.

The quick ratio, which refines the measure of liquidity by excluding inventories, followed a similar pattern. It was highest at around 2.19 in April 2021 and fluctuated generally between 1.17 and 1.65 during the observed period. The ratio slightly increased in late 2022 and into 2023, reaching 1.41 in October 2023, suggesting an improved ability of the company to meet its short-term commitments with more liquid assets. Its variability reflects changes in the composition of liquid assets but remains within a range indicating adequate short-term liquidity.

The cash ratio, indicating the most conservative measure of liquidity as it considers only cash and cash equivalents, also fluctuated during the period. It peaked at 1.46 in April 2021 and later reached 0.94 in July 2024 before declining to approximately 0.48 in October 2024. Despite fluctuations, the cash ratio has generally remained below 1.0 since the beginning of 2022, indicating that a significant portion of liquidity is not held entirely in cash. The decline toward 0.48 suggests a reduction in the company's immediate cash holdings relative to its short-term liabilities, which could signal tightening liquidity or strategic changes in cash management.

Overall, Brady Corporation's liquidity ratios have exhibited stability with minor fluctuations, maintaining ratios above generally accepted minimum levels over the observed period. The consistent positivity across the current and quick ratios indicates adequate short-term financial health, although the decline in the cash ratio in late 2024 warrants attention, as it reflects a decreasing buffer in immediately available cash assets.

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Additional liquidity measure

The analysis of Brady Corporation’s cash conversion cycle (CCC) over the period from October 2020 to July 2025 reveals a trend characterized by fluctuations with periods of both increase and decrease. The CCC measures the number of days it takes for a company to convert its investments in inventory and other resources into cash flows from sales, thus serving as an indicator of operational efficiency and liquidity management.

Initially, the CCC was approximately 91.49 days in October 2020, gradually decreasing to a low of around 87.80 days by April 2021. This decline suggests an improvement in operational efficiency, with the company converting its inventory and receivables into cash more rapidly. However, thereafter, there was a notable upward trend, peaking at 116.76 days in January 2023. This increase indicates a deterioration in either inventory management, receivables collection, or both, resulting in a longer period before cash realized from sales.

Between January 2023 and October 2024, the CCC exhibited relative stabilization, fluctuating within a range approximately from 96.77 days to 113.59 days. Specifically, the CCC decreased from its peak in early 2023 to around 96.77 days by October 2023, signaling a partial recovery in operational efficiency. Subsequently, it experienced a modest increase and decrease, reaching 99.19 days in January 2025 before rising slightly again to approximately 102.41 days in July 2025.

Overall, the CCC trend suggests periods of operational tightening followed by loosening, indicating ongoing efforts to optimize working capital management. The fluctuations reflect responsiveness to market conditions, internal operational adjustments, or strategic changes in credit and inventory policies. While recent data indicate a somewhat stabilized cycle, the values remain elevated compared to the initial levels seen in late 2020 and early 2021, implying room for further efficiency improvements in cash convertibility and overall working capital management.