CNH Industrial N.V. (CNH)

Based on the provided data, the current ratio of CNH Industrial N.V. has shown fluctuations over the years. In December 2020, the current ratio was 1.73, indicating the company's ability to cover its short-term liabilities with its current assets. However, by December 2021, the current ratio significantly improved to 4.41, signifying a strong liquidity position. It then dropped in the following years but remained above 1, indicating the company's ability to meet its short-term obligations.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also demonstrated variability. In December 2020, the quick ratio was relatively low at 0.50, indicating a potential difficulty in meeting immediate obligations without relying on inventory. However, the quick ratio improved in December 2021 to 1.02, signaling a better ability to cover current liabilities without relying on inventory. Subsequently, the quick ratio decreased in the following years but generally remained above 0.2, indicating a reasonable level of liquidity.

The cash ratio, which specifically measures the company's ability to cover its current liabilities with cash and cash equivalents, mirrored the trends seen in the quick ratio. In December 2020 and 2021, the cash ratio was 0.50 and 1.02, respectively, suggesting a strong ability to cover short-term obligations with cash. However, the cash ratio decreased in the subsequent years while remaining above 0.2, indicating that the company may have relied less on cash to meet its immediate liabilities.

Overall, the liquidity ratios of CNH Industrial N.V. have shown some fluctuations over the years, with improvements in 2021 followed by slight declines in the following years. Despite the variations, the ratios generally indicate that the company has maintained a reasonable level of liquidity to meet its short-term obligations.

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Additional liquidity measure

CNH Industrial N.V.'s cash conversion cycle has shown a fluctuating trend over the past five years. Starting at 102.33 days on December 31, 2020, the cycle increased to 109.15 days by December 31, 2021 before decreasing slightly to 105.92 days on December 31, 2022. However, in the following years, the cycle extended significantly, reaching 120.20 days on December 31, 2023, and further rising to 130.58 days by December 31, 2024.

These figures suggest that CNH Industrial N.V. has been taking a longer time to convert its investments in raw materials into cash inflows from sales over the period of analysis. It is crucial for the company to manage its cash conversion cycle effectively to avoid liquidity issues and optimize its working capital management. Further analysis should be conducted to identify the reasons behind the observed fluctuations and implement strategies to improve the efficiency of the cash conversion cycle.