Lear Corporation (LEA)

Lear Corp.'s liquidity ratios indicate its ability to meet short-term obligations effectively. The current ratio has remained relatively stable over the past five years, ranging from 1.33 to 1.42, with the latest value being 1.35. This suggests that Lear Corp. has adequate current assets to cover its current liabilities.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also shows consistency over the years, ranging from 1.04 to 1.10. This indicates that Lear Corp. can meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most stringent measure of liquidity, has decreased gradually from 0.46 in 2019 to 0.39 in 2023. Although this ratio is lower compared to the current and quick ratios, it still indicates that Lear Corp. has a sufficient level of cash to cover its immediate liabilities.

Overall, Lear Corp.'s liquidity ratios demonstrate a stable and healthy liquidity position, with the company being able to meet its short-term obligations comfortably. However, a declining trend in the cash ratio may warrant further monitoring to ensure that the company maintains a strong cash position for unexpected contingencies.

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Additional liquidity measure

The cash conversion cycle for Lear Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 86.75 days from 89.79 days in 2022. This indicates that Lear Corp. was able to convert its investments in inventory and accounts receivable into cash more efficiently in 2023 compared to the previous year.

Looking further back, the cash conversion cycle was 89.74 days in 2021 and significantly higher at 102.09 days in 2020. This suggests that in 2020, Lear Corp. took longer to convert its investments into cash, which may have impacted its liquidity and overall operational efficiency.

In comparison, the cash conversion cycle improved in 2019 to 80.36 days, indicating that the company was more effective in managing its working capital and converting it into cash during that period.

Overall, while there have been fluctuations in Lear Corp.'s cash conversion cycle over the past five years, the trend seems to show a recent improvement in efficiency in converting investments into cash. It would be essential for the company to continue monitoring and managing its working capital effectively to maintain a healthy cash conversion cycle.