Carpenter Technology Corporation (CRS)

The liquidity ratios of Carpenter Technology Corporation have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has generally been on an upward trend from 2020 to 2022 before dropping in 2023 and then rising again in 2024. The current ratio values for the past five years were 3.41, 2.79, 2.98, 3.65, and 2.80, indicating that the company has generally had a strong ability to meet its short-term liabilities with its current assets.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, shows a similar pattern to the current ratio, with an overall increasing trend from 2020 to 2022, followed by a drop in 2023 and an increase in 2024. The quick ratio values for the past five years were 1.63, 1.25, 1.43, 1.95, and 1.08, indicating that while the company's ability to cover immediate liabilities has improved over time, it dipped in 2023 before recovering in 2024.

The cash ratio, which measures the company's ability to cover its short-term liabilities with its cash and cash equivalents, has been more volatile compared to the current and quick ratios. The cash ratio values for the past five years were 0.43, 0.10, 0.41, 0.94, and 0.43, showing significant fluctuations year over year.

Overall, Carpenter Technology Corporation has exhibited a strong liquidity position, as evidenced by the current ratio consistently above 2 and the quick ratio above 1 in most years. However, the fluctuation in the cash ratio suggests that the company's cash position has varied significantly, potentially indicating changes in the company's cash management practices or investment strategies. Further analysis of the company's cash flow statement and working capital management would provide more insights into its liquidity position.

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Additional liquidity measure

The cash conversion cycle is a key metric that measures how efficiently a company manages its working capital by evaluating the time it takes to convert raw materials into cash from sales. Carpenter Technology Corporation's cash conversion cycle has shown variations over the past five years.

In 2024, the cash conversion cycle increased to 140.01 days compared to the previous year of 129.78 days, indicating a deterioration in the company's efficiency in managing its working capital. However, the cycle was still better than in 2020 when it was 147.83 days.

Despite the increase in 2024, Carpenter Technology Corporation has shown improvement from 2020, indicating potential efforts to streamline operations and manage working capital more effectively.

Analyzing the trend over the past five years, it is evident that Carpenter Technology Corporation has been able to reduce its cash conversion cycle progressively, with intermittent fluctuations. This indicates an overall positive trend in the company's working capital management efficiency over the years. It is essential for the company to continue monitoring and optimizing its cash conversion cycle to ensure sustainable financial health and operational efficiency.