Fortune Brands Innovations Inc. (FBIN)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.25 | 1.70 | 1.59 | 1.39 | 1.64 |
| Quick ratio | 0.56 | 1.78 | 0.81 | 0.69 | 0.86 |
| Cash ratio | 0.24 | 1.34 | 0.47 | 0.24 | 0.31 |
Fortune Brands Innovations Inc.'s liquidity ratios indicate the company's ability to meet short-term obligations. Over the past five years, the current ratio has ranged from 1.25 to 1.70, with the trend showing some fluctuations. Despite a dip in 2024, the current assets have generally been sufficient to cover current liabilities, reflecting a moderate level of liquidity.
The quick ratio, which excludes inventory from current assets, has also fluctuated, ranging from 0.56 to 1.78. This ratio suggests that the company may sometimes struggle to meet its short-term obligations without relying on inventory liquidity.
The cash ratio has varied significantly, from 0.24 to 1.34, indicating a wide range in the company's ability to cover current liabilities with its most liquid assets. The spike in 2023 suggests improved liquidity, but the drop in 2024 raises questions about the company's cash position.
Overall, while the current ratio generally indicates a comfortable liquidity position for Fortune Brands Innovations Inc., the quick ratio and cash ratio suggest that the company may face challenges in meeting its short-term obligations, especially without relying on inventory or when cash reserves are low.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 82.83 | 79.84 | 118.78 | 109.54 | 135.88 |
Fortune Brands Innovations Inc.'s cash conversion cycle has shown fluctuations over the past five years. In 2020, the company had a relatively long cash conversion cycle of 135.88 days, indicating that it took a significant amount of time to convert its investments in inventory and receivables into cash.
However, over the subsequent years, the company improved its efficiency in managing its working capital. By December 31, 2021, the cash conversion cycle had decreased to 109.54 days, reflecting a more efficient conversion of inventory and receivables into cash.
In 2022, there was a slight increase in the cash conversion cycle to 118.78 days, suggesting a potential slowdown in the company's working capital management. Interestingly, by the end of 2023, the cash conversion cycle decreased significantly to 79.84 days, indicating a marked improvement in the company's ability to generate cash from its operating activities.
As of December 31, 2024, the cash conversion cycle remained relatively low at 82.83 days, indicating that Fortune Brands Innovations Inc. continued to effectively manage its working capital and convert its investments into cash efficiently.
Overall, the trend in the cash conversion cycle shows that Fortune Brands Innovations Inc. has been successful in optimizing its working capital management over the past few years, resulting in a more streamlined cash conversion process.