Commercial Metals Company (CMC)

The liquidity ratios of Commercial Metals Co. have shown a generally positive trend over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has increased from 2.99 in 2019 to 3.73 in 2023. This indicates an improvement in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also improved over the years, from 2.00 in 2019 to 2.50 in 2023. This indicates that the company has a better ability to meet its short-term obligations using its most liquid assets.

Furthermore, the cash ratio, which reflects the proportion of current liabilities that can be covered by cash and cash equivalents, has increased from 0.53 in 2019 to 1.03 in 2023, suggesting that the company has enhanced its ability to cover its short-term liabilities with its cash holdings.

Overall, the increasing trend in all three liquidity ratios indicates that Commercial Metals Co. has strengthened its ability to meet its short-term financial obligations and has become more liquid over the years, which may indicate improved financial stability and a reduced risk of insolvency.

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Additional liquidity measure

The cash conversion cycle for Commercial Metals Co. has fluctuated over the past five years, indicating varying efficiency in managing its cash flows. The company's cash conversion cycle decreased from 92.99 days in 2019 to 86.50 days in 2023, implying a more efficient cash conversion process. This improvement suggests better management of the company's inventory, accounts receivable, and accounts payable, resulting in a shorter time taken to convert its resource inputs into cash flows.

It is noteworthy that the cash conversion cycle reached its lowest point in 2023, indicating that the company may have made significant improvements in managing its working capital and optimizing its operational efficiency. However, the cash conversion cycle increased slightly in 2022 and 2021 compared to 2020, suggesting potential challenges in managing working capital during those years. Overall, the trend in the cash conversion cycle illustrates the company's effectiveness in managing its liquidity and operational processes over the analyzed period.