HNI Corp (HNI)

The liquidity ratios of HNI Corp have shown fluctuating trends over the past five years.

The current ratio, which indicates the company's ability to meet its short-term obligations with its current assets, has ranged from 1.03 to 1.19 during this period. The ratio was lowest in 2021 at 1.03 and peaked in 2022 at 1.19 before slightly declining to 1.16 in 2023. Generally, a current ratio above 1 suggests the company is able to cover its short-term liabilities with its current assets, but a decreasing trend may indicate potential liquidity challenges.

The quick ratio, also known as the acid-test ratio, focuses on the company's ability to meet its short-term obligations without relying on inventory. HNI Corp's quick ratio has ranged from 0.58 to 0.74 over the past five years. The ratio was lowest in 2021 at 0.58 and highest in 2020 at 0.74. A quick ratio below 1 may suggest potential difficulty in meeting short-term obligations, and the fluctuating trend of HNI Corp's quick ratio warrants further investigation.

The cash ratio, a more stringent measure of liquidity, evaluates the company's ability to meet its short-term obligations using only its cash and cash equivalents. HNI Corp's cash ratio has varied widely from 0.05 to 0.27 over the period. The ratio was highest in 2020 at 0.27, indicating a relatively higher level of cash reserves compared to the company's short-term liabilities. However, the ratio declined to 0.07 in 2023, which may raise concerns about the company's liquidity position.

In summary, HNI Corp's liquidity ratios have exhibited mixed results over the past five years, with the current ratio showing a slightly decreasing trend, the quick ratio fluctuating, and the cash ratio experiencing significant variability. Further analysis of the company's liquidity management practices and working capital efficiency is advisable to assess the impact of these ratios on its overall financial health.

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Additional liquidity measure

HNI Corp's cash conversion cycle has shown some fluctuations over the past five years, ranging from 28.83 days to 37.50 days. In general, a decreasing trend in the cash conversion cycle from 2019 to 2021 indicates an improvement in the company's efficiency in managing its inventory, receivables, and payables. However, there was a slight increase in the cycle in 2022 and a further increase in 2023, which may suggest potential challenges in managing working capital effectively. Overall, a lower cash conversion cycle indicates that HNI Corp is able to convert its investments in inventory and receivables into cash more quickly, which can be a positive sign of operational efficiency and liquidity management.