Church & Dwight Company Inc (CHD)

Church & Dwight Co., Inc.'s liquidity ratios have shown some fluctuation over the past five years. The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has generally been above 1, indicating a healthy liquidity position. However, there was a notable decrease in the current ratio in 2021, possibly due to changes in the company's current asset composition or liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also been relatively stable over the years, albeit below 1. This suggests that the company may have some difficulty meeting its short-term obligations without relying on inventory liquidation.

The cash ratio, which provides the most conservative measure of liquidity by considering only cash and cash equivalents, has shown a similar trend to the quick ratio, remaining below 1. This indicates that Church & Dwight Co., Inc. may have limited liquid resources compared to its short-term obligations.

Overall, while the company's current and quick ratios have generally been acceptable, the cash ratio indicates that Church & Dwight may have room for improvement in terms of increasing its cash reserves to enhance liquidity and better manage short-term cash needs.

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Additional liquidity measure

The cash conversion cycle of Church & Dwight Co., Inc. has fluctuated over the past five years. In 2023, the cash conversion cycle increased to 30.85 days from 26.31 days in 2022. This indicates that, on average, it took the company 30.85 days to convert its investments in inventory into cash receipts from customers.

Comparing 2023 to 2021 and 2020, we observe a significant increase in the cash conversion cycle. In 2021, the cycle was 12.50 days, indicating a considerable improvement in efficiency compared to 2023. The company's ability to convert inventory and receivables into cash was notably higher in 2021. However, there was a slight increase in the cycle in 2022 and more pronounced in 2023.

When compared to 2019, where the cash conversion cycle was 21.26 days, there has been an increase in the cycle in 2023. This suggests that the company took longer to convert its resources into cash flows from operations compared to 2019.

Overall, the trend in the cash conversion cycle indicates some variability, with a notable increase in 2023 compared to previous years. Further analysis and examination of the company's operations and working capital management practices may be needed to understand the reasons behind these changes and to identify potential areas for improvement in efficiency.