Koppers Holdings Inc (KOP)

Koppers Holdings Inc's liquidity ratios, as shown in the table, provide insights into the company's ability to meet short-term obligations and manage its current liabilities effectively.

The current ratio, a key liquidity metric, has shown a generally positive trend over the past five years, increasing from 1.75 in 2019 to 2.14 in 2023. This indicates that the company has improved its ability to cover its short-term liabilities with its current assets. A current ratio above 1.0 suggests that Koppers Holdings Inc has more current assets than current liabilities, which is generally seen as a healthy sign.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also exhibited an upward trend, rising from 0.74 in 2019 to 0.93 in 2023. Although this ratio is lower than the current ratio, it is still above 1.0 in most years, suggesting that the company can meet its short-term obligations even when excluding inventory.

Furthermore, the cash ratio, which focuses solely on the company's ability to cover current liabilities with its cash and cash equivalents, has fluctuated over the years but has generally increased from 0.18 in 2019 to 0.31 in 2023. The upward trend indicates an improved ability to cover short-term liabilities with readily available cash, which is a positive indicator of liquidity.

Overall, the liquidity ratios of Koppers Holdings Inc suggest that the company has maintained a strong liquidity position over the years, with improving trends in the current ratio, quick ratio, and cash ratio. This indicates that the company is well-positioned to meet its short-term financial obligations and has efficient management of its current assets and liabilities.

---

Additional liquidity measure

The cash conversion cycle of Koppers Holdings Inc has shown fluctuations over the past five years. The company's ability to convert its investments in inventory and receivables into cash inflows has varied, as indicated by the cycle duration.

In 2023, the cash conversion cycle increased to 74.98 days from 72.84 days in 2022, suggesting a slight deterioration in the company's efficiency in managing its working capital. This increase may imply that it took Koppers Holdings Inc longer to convert its raw materials and finished goods into sales and subsequently collect cash from customers.

Comparing 2023 to earlier years, 2021 stood out with a higher cycle duration of 78.27 days, while 2019 had the lowest cycle duration at 67.11 days. The trend over the years indicates some variability but points to a generally consistent effort by the company to manage its working capital effectively.

Analyzing the cash conversion cycle provides insights into Koppers Holdings Inc's operational efficiency and liquidity management. A shorter cycle duration typically indicates that the company is able to quickly convert its resources into cash, which can positively impact its cash flow and overall financial health.

Overall, while fluctuations in the cash conversion cycle are normal for businesses, Koppers Holdings Inc may benefit from focusing on strategies to optimize working capital management in order to enhance its efficiency in converting investments into cash inflows.