Franklin Electric Co Inc (FELE)

The current ratio of Franklin Electric Co Inc has exhibited some fluctuation over the past few years, ranging from a high of 3.21 in September 2020 to a low of 1.69 in June 2022. As of December 31, 2024, the current ratio stands at 2.22, indicating that the company has more than twice as many current assets as current liabilities.

The quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, has also shown variability over the years. The ratio has ranged from a low of 0.06 in June 2022 to a high of 0.64 in December 2020. As of December 31, 2024, the quick ratio is 0.51, suggesting that the company may have some difficulty meeting its short-term obligations without relying on inventory.

The cash ratio, which is the most stringent measure of liquidity as it considers only cash and cash equivalents, has followed a similar pattern of fluctuations. It has ranged from 0.06 in June 2022 to 0.64 in December 2020. As of December 31, 2024, the cash ratio is 0.51, indicating that the company possesses sufficient cash to cover 51% of its current liabilities.

Overall, the liquidity ratios of Franklin Electric Co Inc indicate that the company generally maintains a healthy level of liquidity, with the current ratio consistently above 1.0 and the quick and cash ratios showing some volatility but remaining at relatively acceptable levels. It suggests that the company is well-positioned to meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Franklin Electric Co Inc has shown fluctuations over the past few years. The trend indicates an initial increase from around 131 days to 165 days in June 2022, followed by a gradual decline to 135 days by December 2024.

A higher cash conversion cycle suggests that the company takes longer to convert its investments in inventory and other resources into cash receipts from customers. This extended cycle could indicate inefficiencies in managing working capital or potential issues with inventory turnover and collection periods.

On the other hand, a decreasing trend in the cash conversion cycle could imply improvements in the company's efficiency in managing its cash flow and working capital. This reduction could result from better inventory management, quicker sales conversion, or more effective accounts receivable collection processes.

Overall, monitoring the cash conversion cycle is crucial as it helps assess the effectiveness of Franklin Electric Co Inc in managing its operating cycle and liquidity. By analyzing this metric over time, stakeholders can gain insights into the company's financial health and operational efficiency.