Carlisle Companies Incorporated (CSL)

The liquidity ratios of Carlisle Companies Incorporated provide insights into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown some fluctuations over the past few years. It remained relatively stable at around 3 to 4 in 2020 and early 2021, indicating a comfortable liquidity position. However, the ratio started to decline significantly from June 2022 to June 2023, hitting a low of 0.36, which may suggest potential liquidity challenges during that period. The ratio began to improve thereafter and recovered to around 2 by the end of 2024.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio exhibited fluctuations over the years. It remained above 1 in 2020 and early 2021 but dropped below 0.5 from March 2023 to September 2023, indicating a potential strain on short-term liquidity. However, the ratio rebounded in the following periods, reaching levels above 1 by the end of 2024.

The cash ratio, which focuses solely on the most liquid assets like cash and equivalents, generally mirrored the trends seen in the quick ratio. It followed a similar pattern of decline from March 2023 to September 2023 before recovering towards the end of 2024.

Overall, the liquidity ratios of Carlisle Companies Incorporated suggest that while the company faced some challenges in maintaining liquidity in the past, it has managed to improve its short-term liquidity position by the end of 2024. Monitoring these ratios closely will be crucial to assess the company's ability to meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Carlisle Companies Incorporated has displayed fluctuations over the periods analyzed, ranging from a low of 42.10 days on September 30, 2023, to a high of 70.42 days on March 31, 2023. The cash conversion cycle represents the time it takes for a company to convert its inputs into cash flows from sales.

A lower number of days in the cash conversion cycle is generally favorable as it indicates that the company is able to collect cash from its customers more quickly and/or has longer time to pay its suppliers. Conversely, a higher number of days suggests that the company is taking longer to convert its investments in raw materials and work-in-progress into cash through sales.

In analyzing Carlisle Companies Incorporated's cash conversion cycle, it is observed that the cycle has generally been within a manageable range, with some fluctuations. Management may need to focus on optimizing working capital management to potentially reduce the cycle, thereby improving efficiency in cash flow operations. Monitoring and managing the components of the cash conversion cycle, including days inventory outstanding, days sales outstanding, and days payables outstanding, can help enhance the company's overall liquidity and financial performance.