Century Aluminum Company (CENX)

Based on the data provided, Century Aluminum Company's liquidity ratios have fluctuated 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 shown significant variability, ranging from a low of 1.01 in 2023 to a high of 2.09 in 2019. A current ratio above 1 indicates that the company has sufficient current assets to cover its current liabilities, with a higher ratio suggesting a stronger liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Century Aluminum Company's quick ratio has also experienced fluctuations, with a low of 0.22 in 2021 and a high of 0.60 in 2019. A quick ratio below 1 may indicate that the company could potentially struggle to meet its short-term obligations without relying on the sale of inventory.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has shown inconsistency over the years. Century Aluminum Company's cash ratio ranged from a low of 0.05 in 2021 to a high of 0.34 in 2020. A cash ratio below 1 signifies that the company does not have enough cash on hand to cover its current liabilities fully.

Overall, the downward trend in the quick and cash ratios in recent years may raise concerns about Century Aluminum Company's liquidity position. It is essential for investors and stakeholders to closely monitor these ratios to assess the company's ability to meet its short-term financial obligations and manage liquidity effectively.

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Additional liquidity measure

The cash conversion cycle of Century Aluminum Company has fluctuated over the past five years, indicating varying efficiency in managing its working capital.

In 2023, the company's cash conversion cycle increased significantly to 54.26 days from 33.42 days in 2022. This suggests that Century Aluminum took longer to convert its resources into cash during the most recent year, potentially facing challenges in managing its inventory, receivables, and payables effectively.

Comparing 2023 to prior years, the company had a lower cash conversion cycle in 2022 than in 2021, showcasing improved working capital management. However, the cycle in 2023 surpassed that of 2021, indicating a regression in operational efficiency.

Furthermore, the cash conversion cycle in 2020 and 2019 was higher than in 2023, implying that Century Aluminum was more effective in converting its resources into cash in the most recent year despite the significant increase from 2022.

Overall, Century Aluminum needs to closely monitor its working capital components, such as inventory levels, accounts receivable collection, and accounts payable management, to optimize its cash conversion cycle and enhance financial performance.