Cabot Corporation (CBT)

Cabot Corporation's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has generally been above 1, indicating a healthy liquidity position. The ratio has gradually improved from 1.85 in 2020 to 2.08 in 2024, suggesting an increasing ability to meet its short-term obligations.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown an upward trend over the years. Starting at 1.08 in 2020, the quick ratio has increased to 1.24 in 2024, indicating an improved ability to cover immediate liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has been relatively stable over the years, hovering around 0.29. This indicates that Cabot Corporation has maintained a consistent level of cash reserves relative to its current liabilities.

Overall, Cabot Corporation's liquidity ratios demonstrate a positive trend, with improving current and quick ratios reflecting a strengthening liquidity position over the years. The stable cash ratio suggests that the company has maintained a prudent level of cash reserves to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Cabot Corporation has shown some fluctuations over the past five years. In general, a decreasing trend in the cash conversion cycle indicates an improvement in the company's liquidity and efficiency in managing its working capital.

From 2020 to 2022, the cash conversion cycle increased from 65.79 days to 84.53 days, suggesting a delay in converting the company's investments in inventory and accounts receivable into cash. However, in 2023 and 2024, there was a slight improvement in the cash conversion cycle, decreasing to 81.88 days and 73.84 days, respectively.

Overall, Cabot Corporation's cash conversion cycle has been relatively stable, indicating a moderate level of efficiency in managing its cash flows and working capital. It is essential for the company to continue monitoring and optimizing its working capital management processes to ensure efficient operations and sustainable financial performance.