FMC Corporation (FMC)

The liquidity ratios of FMC Corp. over the past five years indicate the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been relatively stable, ranging from 1.40 to 1.55. The current ratio of FMC Corp. has been above 1.0 in each of the past five years, indicating that the company has had sufficient current assets to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. FMC Corp. has maintained a consistent quick ratio of around 1.00 over the past five years, suggesting the company's ability to cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has shown a declining trend from 0.34 in 2020 to 0.21 in 2023. This indicates that FMC Corp. has less cash on hand relative to its current liabilities in recent years.

Overall, the liquidity ratios of FMC Corp. suggest that the company has maintained a healthy level of liquidity over the past five years, with the current and quick ratios indicating a generally stable ability to meet short-term obligations. However, the declining trend in the cash ratio is worth monitoring as it may signal a potential liquidity challenge in the future.

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Additional liquidity measure

The cash conversion cycle of FMC Corp. has shown fluctuations over the past five years. The cycle increased from 193.55 days in 2019 to 374.13 days in 2023, reaching its peak during this period. This indicates a decrease in efficiency in converting investments in inventory and accounts receivable into cash during the most recent year.

When comparing the cycle to the last end-of-year data, the firm has experienced a rise of about 151.56 days from 2022 to 2023, which is a significant change in the cycle efficiency. The 2023 figure also surpassed the cycle values observed in prior years, highlighting a trend towards longer cash conversion cycles.

Overall, the cash conversion cycle for FMC Corp. has lengthened over the past five years, signaling potential challenges in managing working capital efficiently. This could impact the company's liquidity position and operating performance, necessitating a closer examination of their inventory management and accounts receivable practices.