LyondellBasell Industries NV (LYB)

Based on the provided data, let's analyze the liquidity ratios of LyondellBasell Industries NV:

1. Current Ratio:
The current ratio measures the company's ability to meet short-term obligations with its current assets. LyondellBasell's current ratio has fluctuated over the past few years, ranging from as low as 0.48 to as high as 2.36. Generally, a current ratio above 1 indicates that the company can cover its short-term liabilities with its current assets. Although the ratio has shown some volatility, it has mostly remained above 1, implying that the company typically has enough current assets to cover its current liabilities.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. LyondellBasell's quick ratio has also displayed variability, with values ranging from 0.14 to 0.72. A quick ratio below 1 suggests that the company may have difficulty meeting its immediate short-term obligations without relying on inventory. While the quick ratio has fallen below 1 at certain points, indicating potential liquidity challenges, it has generally remained relatively stable over the periods examined.

3. Cash Ratio:
The cash ratio is the most conservative liquidity measure, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents. LyondellBasell's cash ratio has shown a similar trend to the quick ratio, fluctuating between 0.14 and 0.72. A cash ratio below 1 indicates that the company may need to rely on sources other than cash to meet its short-term obligations. Despite some fluctuations, the company's cash ratio has generally remained in line with the quick ratio, reflecting a consistent liquidity position over the analyzed periods.

In summary, while LyondellBasell Industries NV has experienced some fluctuations in its liquidity ratios, the company has maintained a generally stable liquidity position with the ability to cover its short-term obligations using its current assets, excluding and including inventory. It is important to continue monitoring these ratios to ensure the company's ability to meet its short-term financial commitments.

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See also:

LyondellBasell Industries NV Liquidity Ratios (Quarterly Data)

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Additional liquidity measure

The cash conversion cycle of LyondellBasell Industries NV, which measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales, has shown a fluctuating trend over the past few years.

From March 31, 2020, to December 31, 2021, the cash conversion cycle increased steadily from 50.49 days to 65.09 days, indicating a potential strain on the company's liquidity and efficiency in managing working capital. However, there was a notable decrease by the end of March 31, 2022, reaching 44.48 days, which suggests an improvement in managing its cash flow and operational efficiency.

Subsequently, from March 31, 2022, to December 31, 2024, the cash conversion cycle remained relatively stable within the range of 39.99 to 53.22 days. This stability can indicate effective management of the company's working capital and inventory levels, leading to a more balanced cash flow and profitability.

Overall, the trend in the cash conversion cycle of LyondellBasell Industries NV reflects both challenges and improvements in working capital management. Monitoring this cycle is crucial for assessing the company's efficiency in converting investments into cash and sustaining its operations effectively.