FMC Corporation (FMC)

FMC Corporation's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has ranged from 1.40 to 1.64. Although the current ratio decreased slightly from 2020 to 2021, it improved in the following years, indicating the company's improved short-term liquidity position overall.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. FMC Corporation's quick ratio has remained relatively low, varying from 0.09 to 0.15. This suggests that the company may have some difficulty meeting its short-term obligations without relying on inventory in times of financial strain.

The cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, has mirrored the trends of the quick ratio, ranging from 0.09 to 0.20. This indicates that FMC Corporation may have limited cash reserves relative to its short-term obligations.

Overall, while FMC Corporation's current ratio has shown some improvement over the years, its quick ratio and cash ratio remain relatively low, suggesting that the company may need to carefully manage its liquidity position to ensure it can meet its short-term financial commitments effectively.

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Additional liquidity measure

To analyze FMC Corporation's cash conversion cycle based on the provided data, we can observe the trend over the five years from December 31, 2020, to December 31, 2024.

- In December 2020, the cash conversion cycle was 154.39 days, indicating that FMC Corporation takes approximately 154 days to convert its investments in raw materials and production into cash from sales.
- By December 2021, the cash conversion cycle increased to 178.56 days, which suggests a lengthening of the time it takes for the company to convert its inputs into cash.
- However, in December 2022, the cash conversion cycle decreased to 173.45 days, which could indicate an improvement in the efficiency of FMC Corporation's operations in terms of managing working capital.
- The trend reversed in December 2023, where the cash conversion cycle significantly increased to 237.02 days. This sharp increase might indicate challenges in managing inventory, collecting receivables, or paying suppliers within the usual timeframes.
- Finally, by December 2024, the cash conversion cycle decreased to 168.87 days, showing a partial recovery from the high observed in 2023.

Overall, there seems to be variation in FMC Corporation's cash conversion cycle over the years, with improvements and challenges observed in different periods. This may warrant further investigation into the company's working capital management practices and operational efficiency to ensure sustainable cash flow and profitability.