Compass Minerals International Inc (CMP)

Liquidity ratios

Sep 30, 2023 Sep 30, 2022 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Current ratio 2.19 2.41 2.55 2.64 2.55
Quick ratio 0.61 0.92 0.73 1.27 1.20
Cash ratio 0.14 0.20 0.10 0.12 0.10

The liquidity ratios of Compass Minerals International Inc have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has decreased from 2.55 in 2020 to 2.15 in 2023. This suggests a slight decline 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 exhibited a decreasing trend, falling from 1.58 in 2019 to 0.73 in 2023. This indicates a potential reduction in the company's ability to cover its short-term obligations using its most liquid assets.

The cash ratio, which specifically measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also experienced a downward trend, declining from 0.49 in 2018 to 0.26 in 2023. This suggests a decrease in the company's immediate ability to meet short-term obligations with its readily available cash.

Overall, the declining trends in these liquidity ratios may indicate a potential decrease in short-term liquidity and the company's ability to meet its immediate financial obligations. It would be prudent for stakeholders to closely monitor these liquidity measures to ensure the company's financial health and ability to meet its short-term obligations.


Additional liquidity measure

Sep 30, 2023 Sep 30, 2022 Dec 31, 2020 Dec 31, 2019 Dec 31, 2018
Cash conversion cycle days 730.89 397.40 642.93 416.24 364.72

The cash conversion cycle of Compass Minerals International Inc has fluctuated over the last five years. In 2023, the company's cash conversion cycle increased to 142.78 days from 115.17 days in 2022, indicating a longer period to convert its investments in inventory and other resources into cash. This may be attributed to an increase in the time required to sell inventory or a decrease in the collection period for receivables.

Comparing 2023 to 2020, the cash conversion cycle improved from 167.70 days to 142.78 days, suggesting a more efficient management of working capital. Similarly, 2019 also witnessed a lower cash conversion cycle at 142.47 days, likely indicating effective management of inventory and cash collection.

In 2018, the company had a cash conversion cycle of 123.40 days, indicating a relatively efficient use of working capital compared to the subsequent years. Overall, the trend in the cash conversion cycle reflects fluctuations in the company's ability to efficiently manage its working capital and convert it into cash.