Lumen Technologies Inc (LUMN)

The liquidity ratios of Lumen Technologies Inc indicate the company's ability to meet its short-term obligations. The Current Ratio has shown improvement from 0.48 in 2020 to 1.21 in 2024, reflecting an increase in current assets relative to current liabilities over the years. This suggests that the company has a better capacity to cover its short-term debt obligations with its current assets.

Similarly, the Quick Ratio has also displayed an upward trend, from a low of 0.05 in 2021 to 0.52 in 2024. This ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. The steady improvement in the Quick Ratio indicates the company's ability to meet its short-term liabilities with its most liquid assets.

The Cash Ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has also seen a positive progression from 0.05 in 2021 to 0.52 in 2024. This indicates that Lumen Technologies Inc has been progressively enhancing its cash holdings relative to its current liabilities, further strengthening its ability to settle immediate financial obligations using cash resources.

Overall, the improving trends in the Current Ratio, Quick Ratio, and Cash Ratio over the years suggest that Lumen Technologies Inc has been managing its liquidity effectively, enhancing its ability to meet short-term financial commitments and maintain financial stability.

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Additional liquidity measure

The cash conversion cycle for Lumen Technologies Inc has fluctuated over the past five years. In December 2020 and 2021, the company had a relatively efficient cash conversion cycle of 4.29 days and 4.13 days, respectively. This indicates that the company was able to quickly convert its investments in inventory and accounts receivable into cash during those periods.

However, there was a significant increase in the cash conversion cycle in December 2022 and 2023, reaching 10.95 days and 10.68 days, respectively. This longer cycle suggests that Lumen Technologies took longer to convert its investments into cash, which may have impacted its liquidity and operating efficiency.

In December 2024, there was a slight improvement in the cash conversion cycle to 7.95 days, indicating a modest recovery in the company's ability to convert its assets into cash more efficiently compared to the previous two years.

Overall, fluctuations in the cash conversion cycle can provide insights into Lumen Technologies' management of working capital and operational effectiveness in converting its assets into cash. Efforts to optimize the cash conversion cycle can help improve the company's liquidity position and overall financial performance.