Flowserve Corporation (FLS)

Flowserve Corp.'s liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has decreased from 2.25 in 2019 to 1.88 in 2023. This indicates a potential decrease in the company's ability to meet its short-term liabilities.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also decreased over the years from 1.66 in 2019 to 1.27 in 2023. This suggests a reduced ability to cover immediate liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers the cash and cash equivalents available to cover current liabilities, has shown a downward trend from 0.94 in 2019 to 0.65 in 2023. This indicates a decreasing ability of Flowserve Corp. to meet its short-term obligations solely with its cash reserves.

Overall, the declining trend in all three liquidity ratios suggests that Flowserve Corp. may be experiencing challenges in maintaining sufficient liquid assets to meet its short-term financial obligations effectively. It is important for the company to closely monitor its liquidity position and take necessary steps to improve liquidity management in order to ensure financial stability and sustainability.

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Additional liquidity measure

The cash conversion cycle of Flowserve Corp. has shown fluctuating trends over the last five years, ranging from 102.99 days in 2019 to 133.17 days in 2022. A decrease in the cash conversion cycle indicates an improvement in the company's efficiency in converting its resources into cash. However, it seems that in 2022, there was a significant increase in the number of days it takes for Flowserve to convert its investments in raw materials and other resources into cash receipts from customers.

In 2023, there was a reduction in the cash conversion cycle to 114.33 days, suggesting a positive trend towards better working capital management. Despite this improvement, it is essential for Flowserve to continue monitoring and optimizing its cash conversion cycle to ensure efficient use of its resources and timely collection of cash from its operations.

Overall, the company's cash conversion cycle is a critical indicator of its operational efficiency and liquidity management. By analyzing this metric over multiple periods, investors and stakeholders can gauge how effectively Flowserve is managing its working capital and cash flows.