Quaker Chemical Corporation (KWR)

Quaker Houghton's liquidity ratios show a generally positive trend over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has been consistently above 2, indicating a healthy liquidity position. This suggests that the company has more than enough current assets to cover its current liabilities.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown improvement over the years, with the ratio remaining above 1.5 in each year. This indicates that the company has an adequate level of liquid assets to cover its short-term liabilities without relying on inventory sales.

The cash ratio, which is the most conservative liquidity measure focusing solely on cash and cash equivalents, has also been on an upward trend. While the ratio is below 1 in each year, indicating that the company does not hold enough cash to cover its short-term liabilities, the increasing trend suggests a positive liquidity position.

Overall, Quaker Houghton's liquidity ratios paint a favorable picture of the company's ability to meet its short-term obligations with its current assets and cash reserves. This indicates a strong and improving liquidity position over the past five years.

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Additional liquidity measure

The cash conversion cycle of Quaker Houghton has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 97.49 days compared to 113.73 days in 2022. This indicates that the company was able to convert its investments in inventory and accounts receivable into cash more efficiently in 2023.

However, the company's cash conversion cycle was lower in 2020 at 94.39 days compared to 2023. This suggests that Quaker Houghton took longer to convert its investments into cash in 2023 than in 2020. Moreover, in 2019, the company had the highest cash conversion cycle at 126.41 days, indicating a longer period required to convert investments into cash compared to the subsequent years.

Overall, although there have been fluctuations in the cash conversion cycle of Quaker Houghton over the past five years, the trend shows a general improvement in cash conversion efficiency from 2019 to 2023. This could suggest better management of working capital and potential improvements in inventory turnover and accounts receivable collection processes.