FTI Consulting Inc (FCN)

Based on the liquidity ratios of FTI Consulting Inc. over the past five years, we observe a fluctuating trend in the company's ability to meet its short-term obligations.

1. Current Ratio: The company's current ratio has ranged from 1.69 to 1.96 during the period under consideration. A current ratio above 1 indicates that FTI Consulting Inc. has more current assets than current liabilities, which generally signifies a healthy liquidity position. The gradual decline from 2019 to 2020 followed by an increase thereafter may suggest varying efficiency in managing short-term obligations.

2. Quick Ratio: The quick ratio reflects the company's ability to pay off its current liabilities without relying on the sale of inventory. FTI Consulting Inc. has maintained a consistent quick ratio matching its current ratio over the years, implying that its liquidity position is not overly dependent on inventory value. The stability in this ratio indicates a prudent approach to managing short-term obligations without relying heavily on inventory conversion.

3. Cash Ratio: The cash ratio represents the proportion of a company's current assets held in cash or cash equivalents. FTI Consulting Inc.'s cash ratio has fluctuated between 0.46 and 0.81, indicating variations in the proportion of liquid assets held in cash. The downward trend in the cash ratio from 2022 to 2023 may imply a decrease in the company's cash reserves relative to its current liabilities.

In summary, FTI Consulting Inc. has shown varying liquidity positions over the years, with fluctuations in its ability to meet short-term obligations. While the current and quick ratios suggest reasonably healthy liquidity levels, the decreasing cash ratio raises some concerns regarding the company's cash holdings relative to its short-term liabilities. Further analysis of cash management practices and working capital efficiency may provide insights into FTI Consulting Inc.'s overall liquidity management strategies.

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Additional liquidity measure

FTI Consulting Inc.'s cash conversion cycle has exhibited fluctuations over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In 2023, the cash conversion cycle increased to 116.74 days from 109.02 days in 2022, indicating a lengthening time period. This suggests that FTI Consulting Inc. took longer to convert its resources into cash during the year, potentially facing challenges in managing inventory, collecting receivables, or paying its payables.

Comparing to 2021, where the cycle was 100.99 days, the 2023 figure shows a notable increase. This suggests a trend towards less efficient cash conversion compared to the previous year.

However, it's worth noting that the 2023 cycle is lower than the 2019 cycle of 109.92 days, possibly indicating some improvements in cash management efficiency compared to five years ago.

Overall, while the cash conversion cycle in 2023 increased compared to the prior year, the company's performance in converting resources into cash remains relatively stable, showing signs of improvement compared to the cycle observed five years ago. Keeping a close eye on managing inventory, receivables, and payables will be crucial for FTI Consulting Inc. to enhance its cash conversion efficiency further.