Edgewell Personal Care Co (EPC)

The liquidity ratios of Edgewell Personal Care Co indicate the ability of the company to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities using its short-term assets, has shown a fluctuating trend over the past five years, ranging from 1.58 to 2.12. Although the current ratio has increased in 2023 compared to the previous year, it remains at a healthy level, indicating the company's ability to meet its short-term obligations.

The quick ratio, which excludes inventory from current assets, has remained constant at 0.90 for the past two years. This indicates that Edgewell Personal Care Co may have a significant amount of inventory in relation to its short-term obligations, which could potentially impact its ability to quickly pay off its liabilities.

The cash ratio, which measures the company's ability to pay off its current liabilities using its cash and cash equivalents, has fluctuated over the past five years but has shown an increasing trend in 2023. However, the ratio remains relatively low at 0.66, suggesting that Edgewell Personal Care Co may have limited cash reserves available to cover its short-term liabilities.

In conclusion, while the current ratio reflects a favorable liquidity position for Edgewell Personal Care Co, the stagnant quick ratio and relatively low cash ratio raise some concerns about the company's ability to swiftly meet its short-term obligations, particularly in relation to its inventory levels and available cash reserves.

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Additional liquidity measure

The cash conversion cycle (CCC) of Edgewell Personal Care Co has shown fluctuating trends over the past five years. The CCC increased from 85.16 days in 2019 to 103.26 days in 2023, with intermittent fluctuations in between. This indicates a longer time taken by the company to convert its investments in inventory and other resources into cash.

The increase in the CCC suggests that Edgewell Personal Care Co's efficiency in managing its working capital has declined. The company may be taking longer to sell its inventory, collect receivables, and pay its suppliers, which could lead to increased financing costs and reduced cash flows.

It is important for Edgewell Personal Care Co to closely monitor and manage its cash conversion cycle to ensure efficient utilization of its working capital. Lengthening cash conversion cycles can strain the company's liquidity and operational efficiency, potentially impacting its overall financial health and ability to invest in growth opportunities.