Knife River Corporation (KNF)

Knife River Corporation's liquidity ratios provide insight into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, shows a fluctuating trend over the years. It started at a healthy level of 2.85 as of December 31, 2022, then dropped significantly to 1.35 as of March 31, 2023, before gradually increasing again to reach 2.67 as of December 31, 2024. Overall, the current ratio remains above 1, indicating that Knife River Corporation has sufficient current assets to cover its current liabilities.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, shows a similar pattern of fluctuation. Starting at a concerning level of 0.02 as of March 31, 2023, the quick ratio improved over time to hit 0.76 as of December 31, 2023, and then remained relatively stable around that level, reaching 0.76 again by December 31, 2024. This indicates that the company has enough liquid assets to cover its current liabilities without relying on selling inventory.

Lastly, the cash ratio, which is the most stringent liquidity ratio as it only considers cash and cash equivalents to current liabilities, also displays a similar pattern of improvement over the years. Starting at 0.02 as of March 31, 2023, the cash ratio increased steadily to 0.76 by December 31, 2023, and maintained at that level through December 31, 2024. This suggests that Knife River Corporation has a solid cash position to meet its short-term obligations.

Overall, while the ratios fluctuate over the periods, the current, quick, and cash ratios indicate that Knife River Corporation has managed its liquidity effectively, ensuring it can meet its short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Knife River Corporation has exhibited fluctuations over the past few quarters.

In December 2022, the cash conversion cycle was 53.94 days, indicating the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. The cycle increased to 62.42 days by March 2023, suggesting a delay in the collection of cash from customers or a longer period in holding inventory.

However, the cycle decreased to 51.37 days by September 2023, showing an improvement in efficiency in managing cash flows and inventory turnover. It further decreased to 50.91 days by December 2023, indicating the company was able to convert its resources into cash more quickly.

By June 2024, the cash conversion cycle increased to 60.92 days, which could indicate potential challenges in managing working capital efficiently. Nonetheless, by December 2024, the cycle decreased slightly to 59.60 days, suggesting efforts to optimize cash flows and inventory management were implemented.

Overall, fluctuations in the cash conversion cycle of Knife River Corporation indicate varying degrees of efficiency in managing working capital, with periods of improvement and potential challenges. It is important for the company to continuously monitor and improve this cycle to ensure effective cash flow management and sustainable operations.