Kenvue Inc. (KVUE)

Kenvue Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has shown a gradual decline from 1.12 as of December 31, 2023, to 0.96 as of December 31, 2024. This downward trend raises concerns about the company's liquidity position.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also been decreasing over the same period, going from 0.63 to 0.56. This suggests that Kenvue Inc. may face difficulties in meeting its short-term obligations without relying on inventory.

Furthermore, the cash ratio, which specifically assesses the company's ability to pay off its current liabilities using only cash and cash equivalents, has remained relatively stable around 0.19 throughout the year 2024. While this ratio provides a more conservative view of liquidity, it shows that Kenvue Inc. may have limited cash reserves available to cover its short-term obligations.

Overall, the declining trend in the current and quick ratios, along with the stable but relatively low cash ratio, suggests that Kenvue Inc. may need to improve its liquidity management to ensure its ability to meet short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle of Kenvue Inc. has shown fluctuations over the year 2024. Starting at 22.46 days on December 31, 2023, it increased to 26.37 days on March 31, 2024, indicating a longer time for the company to convert its resources back to cash. By June 30, 2024, the cash conversion cycle further extended to 33.67 days, suggesting potential challenges in managing cash flow efficiently.

However, there was a significant increase to 41.53 days by September 30, 2024, reflecting possible delays in collecting receivables and managing inventory effectively. Nevertheless, the cash conversion cycle improved slightly to 33.99 days by December 31, 2024, showing a decreased time period for the company to complete its operating cycle.

Overall, the analysis of Kenvue Inc.'s cash conversion cycle indicates varying trends throughout the year, highlighting the importance of closely monitoring and managing working capital to enhance cash flow efficiency and operational performance.