H B Fuller Company (FUL)

The liquidity ratios of H.B. Fuller Company indicate its ability to meet short-term obligations and manage cash flow. The current ratio, which measures the company's ability to pay its short-term liabilities with its current assets, has shown a fluctuating trend over the past five years, ranging from 1.66 to 1.92. This suggests that the company may have experienced some variability in its short-term liquidity position.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also demonstrates a fluctuating trend, ranging from 1.05 to 1.31 over the same period. This indicates that the company's ability to meet short-term obligations without relying on the sale of inventory has varied.

The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also displayed variability, ranging from 0.17 to 0.36. This suggests that the company's cash position in relation to its current liabilities has fluctuated over the past five years.

Overall, the liquidity ratios of H.B. Fuller Company indicate a degree of variability in its short-term liquidity position. This may reflect changes in the company's operating cycle, cash management practices, or potential shifts in the composition of its current assets. It is essential for stakeholders to closely monitor these ratios to assess the company's ability to meet its short-term obligations and manage its cash flow effectively.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower value indicates more efficient management of working capital and a shorter time between the company's outlay of cash and receipt of cash from sales.

Over the past five years, H.B. Fuller Company's cash conversion cycle has displayed a downward trend, decreasing from 72.15 days in 2019 to 64.66 days in 2023. This suggests an improvement in the company's ability to efficiently manage working capital and convert inventory and other resources into cash flows from sales.

The reduction in the cash conversion cycle can be attributed to potential improvements in inventory management, accounts receivable collection, and accounts payable payment. This may indicate enhanced efficiency in managing the company's working capital and optimizing its cash flow processes.

Overall, the decreasing trend in H.B. Fuller Company's cash conversion cycle reflects a positive development in the company's working capital management and signifies potential improvements in its operating efficiency and cash flow generation.