Masco Corporation (MAS)

Masco Corp.'s liquidity ratios indicate its ability to meet short-term financial obligations. The current ratio has shown some fluctuation over the past five years, ranging from a low of 1.56 in 2022 to a high of 1.80 in 2020. This ratio measures the company's ability to cover its short-term liabilities with its current assets, with a higher ratio indicating stronger liquidity. Masco Corp.'s current ratio has generally remained above 1, indicating that it has sufficient current assets to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Masco Corp.'s quick ratio has varied from 0.91 in 2022 to 1.35 in 2020. A ratio above 1 suggests that the company can cover its short-term obligations without relying on selling inventory. Masco Corp.'s quick ratio has generally improved over the years, indicating a more liquid position.

The cash ratio, which is the most conservative liquidity measure, reflects the proportion of current liabilities that could be covered by cash and cash equivalents alone. Masco Corp.'s cash ratio has ranged from 0.30 in 2022 to 0.76 in 2020. A higher cash ratio indicates a stronger ability to meet short-term obligations without the need to rely on liquidating other current assets. Although Masco Corp.'s cash ratio has fluctuated, it generally indicates a moderate level of liquidity.

Overall, Masco Corp. demonstrates reasonable liquidity based on its current, quick, and cash ratios over the past five years. The company has generally maintained levels above industry benchmarks, suggesting it has the ability to meet its short-term financial commitments.

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Additional liquidity measure

Masco Corp.'s cash conversion cycle has shown fluctuations over the past five years. The trend indicates a slight decrease from 59.06 days in 2019 to 56.44 days in 2020, followed by a marginal increase to 62.36 days in 2021. However, in 2022, there was a significant jump to 70.28 days, showing a reversal in the positive trend. The most recent data for 2023 reports a decrease to 62.88 days, but it still remains higher than the levels observed in 2020 and 2021.

Overall, the cash conversion cycle measures how long a firm takes to convert its investments in inventory into cash inflows from sales. A shorter cycle indicates efficiency in managing working capital, while a longer cycle suggests inefficiencies or potential liquidity challenges. Masco Corp.'s fluctuating cash conversion cycle warrants attention to optimize inventory turnover, accounts receivable collection, and accounts payable management to enhance cash flow and operational efficiency.