Donaldson Company Inc (DCI)

Donaldson Company Inc's liquidity ratios have shown fluctuations over the past five years. The current ratio, which indicates the company's ability to meet short-term obligations using current assets, has ranged from 1.70 to 2.70. Generally, a current ratio above 1 indicates good liquidity, and Donaldson's current ratio has consistently stayed above this threshold.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has ranged from 1.04 to 1.70. The quick ratio shows a slightly lower level of liquidity compared to the current ratio but still indicates that Donaldson has been able to meet its short-term obligations effectively.

The cash ratio, which measures the company's ability to cover immediate liabilities with cash and cash equivalents, has fluctuated between 0.25 and 0.58. A cash ratio above 0.20 is generally considered healthy, and Donaldson's cash ratio has remained above this level.

Overall, Donaldson Company Inc has maintained adequate liquidity levels over the past five years as indicated by its current, quick, and cash ratios. However, the downward trend in these ratios in recent years should be monitored to ensure the company's ability to meet its short-term obligations remains strong.

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Additional liquidity measure

The cash conversion cycle of Donaldson Company Inc has shown a decreasing trend over the past five years. In Jul 31, 2024, the cash conversion cycle was 79.45 days, indicating that the company took 79.45 days to convert its investments in raw materials into cash from sales. This was an improvement from the previous year where the cycle was 82.00 days.

The decreasing trend in the cash conversion cycle suggests that Donaldson Company Inc has been managing its working capital more efficiently, resulting in quicker conversion of inventory into sales and ultimately into cash. A shorter cash conversion cycle indicates that the company is able to generate cash more quickly, which is generally a positive sign for liquidity and operational efficiency.

Overall, the decreasing trend in the cash conversion cycle for Donaldson Company Inc reflects improvements in working capital management and efficiency in converting investments into cash inflows.