Leggett & Platt Incorporated (LEG)

Leggett & Platt Incorporated's current ratio has shown a fluctuating trend over the years, starting at 1.60 in 2020, dropping to 1.55 in 2021, then increasing to 2.02 in 2022, but subsequently decreasing to 1.49 in 2023 before rising again to 2.00 in 2024. This indicates the company's ability to cover its short-term obligations with its current assets has varied over the years.

The quick ratio, which assesses the company's ability to meet short-term liabilities with its most liquid assets, has generally been low for Leggett & Platt. Starting at 0.35 in 2020 and fluctuating between 0.27 and 0.41 over the years, the quick ratio suggests that the company may have difficulty covering its immediate obligations without relying on inventory.

Similarly, the cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, has also shown a consistent low level, ranging from 0.27 to 0.41. This indicates that Leggett & Platt may have limited cash reserves compared to its short-term obligations.

Overall, the liquidity ratios of Leggett & Platt Incorporated suggest that while the company has varying levels of ability to cover its short-term obligations with its current assets, it may face challenges in meeting immediate liabilities without relying on less liquid assets or external financing.

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Additional liquidity measure

The cash conversion cycle for Leggett & Platt Incorporated has experienced fluctuations over the past five years. Starting at 69.59 days on December 31, 2020, the cycle increased to 89.86 days by December 31, 2021, indicating a longer time taken to convert both inventory and accounts receivable into cash. However, by December 31, 2022, the cycle decreased to 79.44 days, suggesting an improvement in efficiency in managing working capital.

Further progress was made by December 31, 2023, as the cash conversion cycle decreased to 77.28 days, demonstrating continued optimization in the company's cash flow operations. This trend continued into December 31, 2024, as the cycle further decreased to 72.57 days, signaling enhanced effectiveness in converting resources into cash.

Overall, the fluctuations in Leggett & Platt's cash conversion cycle indicate the company's efforts to manage its working capital efficiently and optimize the conversion of inventory and accounts receivable into cash over the years.