Hormel Foods Corporation (HRL)

Based on the provided data, let's analyze the liquidity ratios of Hormel Foods Corporation:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets. A higher current ratio is generally favorable as it indicates a stronger ability to meet short-term liabilities.
- Hormel Foods' current ratio fluctuated over the years, standing at 2.47 on October 31, 2022, dropping to 1.43 by October 29, 2023, and maintaining that level on October 31, 2023.
- There was an improvement in the current ratio to 2.32 by October 27, 2024, and remained the same by October 31, 2024. These ratios suggest that the company's liquidity position improved in the most recent years compared to the initial drop.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity that excludes inventories from current assets. It provides insight into a company's ability to meet short-term obligations without relying on the sale of inventory.
- Hormel Foods' quick ratio was relatively low, standing at 0.68 on October 31, 2022, and remaining at the same level on October 29, 2023.
- The quick ratio dropped significantly to 0.33 on October 31, 2023, indicating a potential liquidity challenge. However, the ratio improved notably to 1.17 by October 27, 2024, before declining to 0.55 by October 31, 2024.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover short-term liabilities. A higher cash ratio implies a stronger ability to cover immediate obligations.
- Hormel Foods' cash ratio showed a mixed performance, starting at 0.68 on October 31, 2022, then dropping to 0.33 on October 29, 2023, and maintained that level on October 31, 2023.
- There was an improvement in the cash ratio to 0.55 by October 27, 2024, and it remained the same by October 31, 2024. Despite the fluctuations, the company showed a stronger cash position in the recent years compared to the initial drop.

In summary, Hormel Foods Corporation's liquidity ratios have shown varying trends over the years. The current ratio indicates an improvement in liquidity position in the most recent years, while the quick ratio and cash ratio displayed fluctuations, posing some challenges in meeting short-term obligations. It is essential for stakeholders to monitor these ratios to assess the company's ability to manage its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Hormel Foods Corporation has displayed fluctuations over the past five periods. Starting at 60.85 days on October 31, 2022, it decreased to 54.88 days on October 29, 2023, before increasing slightly to 60.67 days on October 31, 2023. Subsequently, there was a notable decrease to 54.67 days on October 27, 2024, followed by a modest increase to 58.12 days on October 31, 2024. Overall, the company has shown varying efficiency in converting its investments in raw materials and production into cash inflows, with an average cash conversion cycle of approximately 57.04 days over the five periods analyzed.