Insteel Industries Inc (IIIN)

Insteel Industries Inc's liquidity ratios indicate the company's ability to meet its short-term obligations with its current assets. The current ratio has shown a consistent improvement over the past five years, reaching 5.68 in 2024 from 3.67 in 2020. This indicates that the company has significantly increased its ability to cover short-term liabilities with current assets.

The quick ratio, which excludes inventory from current assets, also demonstrates a positive trend, rising from 2.28 in 2020 to 4.10 in 2023 before slightly declining to 3.51 in 2024. This suggests that Insteel Industries has a sufficient level of liquid assets to cover its short-term obligations, even without relying on inventory.

The cash ratio reflects a company's ability to cover short-term liabilities with its most liquid assets, cash and cash equivalents. Insteel Industries' cash ratio has shown fluctuations over the years, with a notable increase in 2023 to 2.72 before declining to 2.24 in 2024. Despite this fluctuation, the company maintains a healthy cash position to meet its immediate financial obligations.

Overall, Insteel Industries Inc's liquidity ratios indicate a strong liquidity position, with increasing current and quick ratios over the years. The company has a solid ability to meet its short-term obligations and has maintained a healthy cash position, which bodes well for its financial stability and ability to weather any short-term financial challenges.

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Additional liquidity measure

Insteel Industries Inc's cash conversion cycle has fluctuated over the past five years. The cycle represents the time it takes for the company to convert its investments in raw materials into cash flows from sales. A shorter cash conversion cycle indicates efficient management of working capital.

In 2024, the cash conversion cycle increased to 80.24 days compared to the previous year, indicating a potential slowdown in the company's operational efficiency in converting raw materials to cash. However, it was still lower than the cycle in 2022, suggesting an improvement from the previous year.

In 2023, the company had a cash conversion cycle of 78.78 days, which was lower than in 2022 but higher than in 2021. This could indicate that the company improved its efficiency in converting raw materials to cash compared to the previous year.

In 2022, Insteel Industries Inc experienced a significantly higher cash conversion cycle of 123.51 days, which suggests potential challenges in managing working capital and converting investments into cash flows. This indicates a need for the company to address any inefficiencies in its operational and financial processes.

In 2021 and 2020, the company had relatively shorter cash conversion cycles of 65.01 days and 67.83 days, respectively, indicating better efficiency in managing working capital and converting investments into cash compared to the following years.

Overall, Insteel Industries Inc's cash conversion cycle has shown variability over the past five years, with fluctuations suggesting potential areas for improvement in working capital management and operational efficiency. It would be important for the company to analyze the underlying reasons for these fluctuations and take appropriate measures to optimize its cash conversion cycle for sustainable financial performance.