Church & Dwight Company Inc (CHD)

Based on the provided data, we can see a trend of improvement in Church & Dwight Company Inc's liquidity ratios over the years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its short-term assets. Church & Dwight's current ratio was below 1 in 2020 and 2021, indicating potential liquidity concerns. However, there has been a significant increase in the current ratio from 2022 onwards, reaching a healthy level of 1.70 in 2024. This indicates that the company now has more than enough current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Church & Dwight's quick ratio has also shown improvement over the years. While it was below 1 in 2020 and 2021, suggesting potential difficulty in meeting short-term obligations without relying on inventory, it has steadily increased to a strong level of 1.19 in 2024.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover current liabilities. Church & Dwight's cash ratio has increased consistently from 2020 to 2024, indicating a positive trend in the company's ability to cover its short-term obligations with readily available cash.

In summary, Church & Dwight Company Inc has shown significant improvement in its liquidity position over the years, with all three liquidity ratios pointing towards a healthier financial position and better ability to meet short-term obligations without relying heavily on inventory or other less liquid assets.

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Additional liquidity measure

The cash conversion cycle of Church & Dwight Company Inc has shown a fluctuating trend over the past five years. In December 2020, the company had a cash conversion cycle of 17.11 days, indicating that it took approximately 17 days to convert its investments in raw materials into cash from sales.

By December 2021, the cash conversion cycle improved to 12.50 days, implying a more efficient management of inventory, accounts receivable, and accounts payable. However, there was a significant increase in the cycle to 26.31 days by December 2022, which may suggest challenges in managing working capital effectively.

Subsequently, in December 2023 and 2024, the cash conversion cycle continued to increase to 30.85 days and then slightly decreased to 25.81 days, respectively. These prolonged cycles may indicate potential issues in optimizing the company's liquidity and operational efficiency.

Overall, fluctuations in the cash conversion cycle of Church & Dwight Company Inc over the years highlight the importance of closely monitoring working capital management practices to sustain healthy cash flows and operational performance.