Core & Main Inc (CNM)

Core & Main Inc's liquidity ratios have shown fluctuating trends over the past three years.

The current ratio, which measures the company's ability to cover short-term obligations with its current assets, decreased from 3.05 in January 2023 to 2.29 in January 2024. This decline indicates that the company may have experienced a reduction in its short-term liquidity position within the year. However, with a current ratio above 1, Core & Main Inc still appears to have sufficient current assets to cover its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also decreased from 1.56 in January 2023 to 1.26 in January 2024. This suggests that the company's ability to meet its short-term obligations using only its most liquid assets has slightly weakened. However, a quick ratio above 1 indicates that Core & Main Inc still has a reasonable level of liquidity to cover immediate liabilities, albeit to a lesser extent compared to the previous year.

The cash ratio, which focuses solely on the company's ability to cover current liabilities with its cash and cash equivalents, remained low at 0.00 in both January 2024 and 2022, with a slight improvement to 0.24 in January 2023. This indicates that Core & Main Inc relies significantly on assets other than cash to meet its short-term obligations. While having a low cash ratio can signal potential liquidity challenges during periods of financial distress, it is important to consider the company's overall cash management practices and cash flow generation capacity.

In summary, Core & Main Inc's liquidity position, as indicated by the current, quick, and cash ratios, has exhibited some decline or remained low in recent years. This suggests that the company may have experienced changes in its liquidity management or operational efficiency. It is crucial for stakeholders to closely monitor these liquidity ratios to assess the company's ability to meet its short-term financial obligations effectively.

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Additional liquidity measure

Core & Main Inc's cash conversion cycle has improved from 88.22 days in January 2023 to 69.68 days in January 2024. This indicates that the company is managing its cash flow more efficiently, converting its inventory to sales and ultimately collecting cash from customers more quickly. The reduction in the cash conversion cycle suggests that Core & Main Inc is now able to operate more effectively with less cash tied up in the operating cycle, which can lead to improved liquidity and working capital management. This trend bodes well for the company's financial health and overall operational efficiency.