Hexcel Corporation (HXL)

Hexcel Corp.'s liquidity ratios have shown a generally positive trend over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has improved from 2.19 in 2019 to 2.74 in 2023. This indicates that the company has a comfortable cushion of current assets to meet its short-term liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown improvement over the years, increasing from 1.15 in 2019 to 1.68 in 2023. This suggests that the company has a stronger ability to meet its short-term obligations without relying on selling inventory.

The cash ratio, which indicates the company's ability to cover its current liabilities with its cash and cash equivalents, has also exhibited a positive trend, rising from 0.45 in 2019 to 0.93 in 2023. This indicates that Hexcel Corp. has been steadily increasing its liquidity position in terms of cash reserves relative to its current liabilities.

Overall, Hexcel Corp.'s liquidity ratios suggest that the company has a strong liquidity position, with ample current assets to cover its short-term obligations. The improving trend in these ratios indicates that the company's liquidity management has been effective in ensuring financial stability and the ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Hexcel Corp. has shown fluctuations over the past five years. In 2023, the cash conversion cycle improved to 95.08 days compared to the previous year's 100.50 days, indicating a more efficient management of cash flows. However, compared to 2021, the cycle increased from 89.17 days to 95.08 days, suggesting a potential slowdown in the company's ability to convert its investments in inventory and accounts receivable into cash.

In 2020 and 2019, Hexcel Corp. had a lower cash conversion cycle of 71.95 days and 72.61 days, respectively. This indicates that the company was more effective in managing its working capital in those years, potentially due to tighter inventory control and prompt collection of receivables.

Overall, the trend in Hexcel Corp.'s cash conversion cycle suggests variability in the efficiency of the company's working capital management in recent years. It is essential for the company to focus on improving this cycle to ensure a healthy cash flow and operational liquidity.