KBR Inc (KBR)

Based on the provided data, the liquidity ratios of KBR Inc over the past five years show the following trends:

1. Current Ratio:
- The current ratio measures the company's ability to meet short-term obligations with its current assets.
- KBR's current ratio has fluctuated over the years, ranging from a low of 0.96 in 2022 to a high of 1.15 in 2021.
- A current ratio greater than 1 indicates that the company has more current assets than current liabilities, signifying good liquidity.
- Despite some fluctuations, KBR has maintained its current ratio above 1 in most years, indicating a generally healthy liquidity position.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- KBR's quick ratio has also shown variability, ranging from 0.74 in 2022 to 0.96 in 2021.
- A quick ratio above 1 is considered favorable as it suggests the company can cover its short-term liabilities without relying on inventory sales.
- While KBR's quick ratio has been below 1 in all years, it has demonstrated some stability around the 0.80 range, indicating a moderate ability to meet its short-term obligations.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover current liabilities with cash and cash equivalents.
- KBR's cash ratio has been generally low, with values ranging from 0.19 to 0.30 over the years.
- A cash ratio below 1 implies that the company may struggle to meet its short-term obligations solely with cash on hand.
- Although KBR's cash ratio has been consistently below 1, it has remained relatively stable, with slight variations year over year.

Overall, while KBR Inc has maintained current ratios above 1 for the most part, its quick and cash ratios suggest a less robust liquidity position. Management should continue to monitor and potentially improve these ratios to enhance the company's ability to meet short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of KBR Inc has displayed fluctuations over the years based on the data provided. As of December 31, 2020, the company's cash conversion cycle stood at 17.22 days, indicating it took KBR approximately 17.22 days to convert its resources invested in inventory into cash flows from sales.

By December 31, 2021, the cash conversion cycle slightly increased to 19.24 days, suggesting a longer period for the company to turn its inventory into cash. However, in December 31, 2022, the cycle shortened to 17.34 days, showing an improvement in the efficiency of KBR's cash conversion.

There was a significant increase in the cash conversion cycle by December 31, 2023, reaching 21.40 days, indicating a longer duration for KBR to convert its inventory into cash receipts and then back into cash. Finally, by December 31, 2024, the cycle decreased to 13.50 days, suggesting a notable improvement in the company's ability to manage its working capital efficiently.

Overall, the trend in KBR Inc's cash conversion cycle demonstrates variability over the years, with periods of improvement and deterioration. Managing the cash conversion cycle effectively helps companies optimize their working capital and liquidity positions.