Corteva Inc (CTVA)

Corteva Inc's liquidity ratios indicate its ability to meet short-term obligations and maintain financial stability. The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has remained relatively stable over the past five years, ranging from 1.56 to 1.73. Generally, a current ratio above 1 indicates good liquidity, and Corteva's current ratio consistently above 1 suggests that it has been able to meet its short-term obligations comfortably.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Corteva's quick ratio has shown a slight decline over the years, from 1.16 in 2020 to 0.90 in 2023. While the quick ratio is below 1 in the latest fiscal year, indicating potential challenges in meeting immediate obligations without relying on inventory, the company still has a reasonable level of liquidity.

The cash ratio, which specifically assesses a company's ability to cover its current liabilities with its cash and cash equivalents, has fluctuated over the years for Corteva. While the cash ratio was relatively low in 2019 at 0.36, it increased to 0.58 in 2021 before declining slightly to 0.37 in 2023. This indicates that Corteva may have more limited cash reserves compared to its current liabilities but is still able to cover a significant portion using cash on hand.

Overall, Corteva's liquidity ratios suggest that the company has maintained a satisfactory level of liquidity to meet its short-term financial obligations. However, the decreasing trend in the quick ratio and some fluctuations in the cash ratio warrant further monitoring to ensure continued financial stability and the ability to weather potential liquidity challenges in the future.

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Additional liquidity measure

The cash conversion cycle of Corteva Inc has fluctuated over the past five years. In 2023, the cycle increased to 212.65 days from 186.23 days in 2022, indicating a longer period required to convert its investments in inventory and receivables into cash. This could be a concerning trend as it may imply issues with managing working capital efficiently.

Comparing the current cycle to 2021 where it was 153.90 days, there has been a significant increase, suggesting a deterioration in the company's ability to quickly convert its resources into cash. Similarly, the cycle in 2020 was slightly higher at 180.83 days, indicating a possible inefficiency in managing the company's operating cycle.

In contrast, the cash conversion cycle was notably higher in 2019 at 202.34 days, indicating that the company has made some improvements over the years. However, the recent increase in 2023 raises questions about the company's working capital management practices and its impact on overall liquidity.

Overall, monitoring Corteva Inc's cash conversion cycle is essential to assess its operational efficiency and effectiveness in managing its working capital and financial resources. Further analysis and proactive measures may be necessary to optimize the cash conversion cycle and enhance the company's liquidity position.