Graphic Packaging Holding Company (GPK)

Based on the liquidity ratios of Graphic Packaging Holding Co over the past five years, we can observe the following trends:

1. Current Ratio:
- The current ratio measures the ability of a company to meet its short-term obligations using its current assets.
- In 2023, the current ratio decreased to 1.10 from 1.40 in 2022, indicating a decline in the company's ability to cover its current liabilities with its current assets.
- The current ratio has fluctuated over the five-year period, with the highest ratio of 1.51 in 2019 and the lowest at 1.09 in 2020.

2. Quick Ratio:
- The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets.
- Graphic Packaging Holding Co's quick ratio also showed a decreasing trend, dropping to 0.42 in 2023 from 0.57 in 2022.
- The quick ratio has consistently remained below 1 over the period, suggesting potential difficulties in meeting immediate obligations without relying on inventory.

3. Cash Ratio:
- The cash ratio focuses solely on the company's ability to cover its short-term liabilities with cash and cash equivalents.
- Graphic Packaging Holding Co's cash ratio has steadily decreased from 0.17 in 2019 to 0.10 in 2023.
- The decreasing trend in the cash ratio indicates a reduction in the company's ability to meet its short-term obligations solely based on cash holdings.

Overall, the liquidity ratios of Graphic Packaging Holding Co suggest a declining trend in liquidity and potential challenges in meeting short-term obligations, especially in the most recent year. It is essential for the company to closely monitor its liquidity position and implement strategies to improve its short-term financial health.

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Additional liquidity measure

The cash conversion cycle of Graphic Packaging Holding Co has shown some fluctuations over the past five years. In 2023, the cash conversion cycle increased to 65.28 days from 57.15 days in 2022, indicating that the company took longer to convert its investments in inventory and accounts receivable into cash during the most recent year. This suggests potential inefficiencies in the company's working capital management or slowing down of its operations.

Comparing to 2021 and 2020, where the cash conversion cycle was 59.53 days and 56.64 days, respectively, the increase in 2023 is notable. Despite the increase in 2023, the company's cash conversion cycle was still lower than in 2019 when it was recorded at 57.25 days, indicating some improvement over the past five years.

Overall, a longer cash conversion cycle may signal potential issues with inventory management, sales on credit terms, or collection processes, which could lead to a strain on the company's liquidity and cash flow. It would be important for Graphic Packaging Holding Co to closely monitor and address the factors contributing to the extended cash conversion cycle to optimize its working capital efficiency.