Kellanova (K)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.66 | 0.66 | 0.64 | 0.66 | 0.72 |
| Quick ratio | 0.36 | 0.33 | 0.34 | 0.38 | 0.41 |
| Cash ratio | 0.05 | 0.05 | 0.06 | 0.08 | 0.08 |
The liquidity ratios of Kellanova over the past five years indicate some concerning trends. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has remained relatively low and relatively stable around 0.66, suggesting that Kellanova may have struggled to meet its current obligations consistently.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has shown a decreasing trend from 0.41 in 2019 to 0.36 in 2023. This indicates that Kellanova may have become less capable of meeting its short-term liabilities without relying on inventory, which could present challenges in times of financial strain.
Furthermore, the cash ratio, which specifically measures the firm's ability to cover its current liabilities with cash and cash equivalents, has also shown a declining trend from 0.08 in 2019 to 0.05 in 2023. This downward trajectory may suggest that Kellanova's ability to pay off its immediate obligations with readily available cash has weakened over time.
Overall, the liquidity ratios of Kellanova raise concerns about the company's short-term financial health and ability to meet its current obligations. Management should closely monitor these ratios and consider strategies to improve liquidity and ensure the company's financial stability in the future.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -0.61 | -0.66 | 3.89 | -7.17 | -3.71 |
The cash conversion cycle of Kellanova has exhibited variability over the past five years. In 2023, the company had a negative cash conversion cycle of -0.61 days, indicating that it was able to convert its inventory into cash quickly and efficiently. This improvement from the prior year suggests better management of working capital.
In 2022, the cash conversion cycle improved further to -0.66 days, reflecting continued effectiveness in managing the conversion of inventory to cash. This trend bodes well for the company's liquidity position and indicates a streamlined operational efficiency.
Conversely, in 2021, Kellanova experienced a cash conversion cycle of 3.89 days, signifying a longer period required to convert inventory to cash compared to the preceding years. This elongated cycle may suggest inefficiencies in managing working capital or potential challenges in inventory turnover.
In 2020, the company had a notably negative cash conversion cycle of -7.17 days, which indicates a strong ability to convert inventory to cash swiftly, potentially due to effective inventory management practices. However, this extreme negative figure might also signal aggressive tactics to collect receivables or control inventory levels.
Lastly, in 2019, Kellanova had a cash conversion cycle of -3.71 days, reflecting a healthy efficiency in cash conversion and working capital management. This consistent performance over the years signifies the company's ability to optimize its operational processes and maintain a favorable liquidity position.
Overall, while Kellanova's cash conversion cycle has seen fluctuations, the recent improvements in 2022 and 2023 suggest a positive trend towards more efficient working capital management. Monitoring this metric closely will be crucial for assessing the company's operational efficiency and financial health in the future.