Huntington Ingalls Industries Inc (HII)

Huntington Ingalls Industries Inc's liquidity ratios have been fluctuating over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has remained relatively stable around 0.95 in 2023 and 2022, but experienced variability in the prior years, ranging from 1.15 in 2021 to 0.94 in 2019. A current ratio above 1.0 is generally considered favorable, indicating the company has more current assets than current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also showed consistency in 2023 and 2022 at 0.89. Similar to the current ratio, the quick ratio fluctuated in the earlier years, ranging from 1.08 in 2021 to 0.82 in 2019. A quick ratio above 1.0 suggests the company can meet its short-term obligations without relying on inventory.

The cash ratio, which provides the most conservative measure of liquidity by considering only cash and cash equivalents to cover current liabilities, improved to 0.68 in 2023 from 0.61 in 2022. This ratio also varied across the years, reaching its highest level at 0.82 in 2021 and its lowest at 0.58 in 2019. A cash ratio below 1.0 indicates the company may need to rely on sources other than cash to fulfill immediate obligations.

Overall, while the current, quick, and cash ratios of Huntington Ingalls Industries Inc have shown some volatility in recent years, the company has generally maintained levels that suggest a reasonable ability to meet its short-term financial commitments. However, the fluctuations over time suggest the need for ongoing monitoring to ensure continued liquidity and financial stability.

---

Additional liquidity measure

The cash conversion cycle for Huntington Ingalls Industries Inc has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 6.83 days from 9.42 days in 2022, indicating an improvement in its ability to convert its resources into cash. This may suggest more efficient management of working capital during the year.

Comparing the 2023 figure to the data from 2021 and 2020, where the cash conversion cycle was 4.82 days and 6.82 days respectively, the 2023 result falls within this range. This trend implies that Huntington Ingalls Industries Inc maintained a relatively stable cash conversion cycle performance over the last few years.

However, the 2019 figure of 1.23 days stands out as significantly lower than the subsequent years, indicating that the company was exceptionally efficient in converting its cash resources into sales and then back into cash during that particular year.

Overall, the cash conversion cycle provides insight into the efficiency of Huntington Ingalls Industries Inc in managing its working capital and liquidity. It is essential for the company to continue monitoring and optimizing this metric to ensure a healthy cash flow cycle and sustainable operations.