Masco Corporation (MAS)

Masco Corporation's liquidity ratios show a mixed trend over the five-year period from 2020 to 2024. The current ratio, which measures short-term liquidity by comparing current assets to current liabilities, decreased from 1.80 in 2020 to 1.75 in 2024. Although the ratio fluctuated slightly over the years, Masco Corporation generally maintained a healthy level of current assets to cover its short-term obligations.

In contrast, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, declined more significantly from 1.96 in 2020 to 1.07 in 2024. This trend suggests a decrease in Masco Corporation's ability to meet its immediate liabilities with its most liquid assets, indicating a potential need to manage its short-term liquidity more efficiently.

Furthermore, the cash ratio, which assesses the firm's ability to cover its current liabilities with cash and cash equivalents, exhibited a notable decrease from 1.37 in 2020 to 0.41 in 2024. This downward trend may indicate a reduction in Masco Corporation's ability to pay off its short-term obligations solely using its cash reserves, highlighting a potential liquidity concern.

Overall, while Masco Corporation's current ratio remained relatively stable, the significant declines in the quick ratio and cash ratio over the five-year period suggest a potential weakening of its short-term liquidity position. It may be advisable for the company to closely monitor its liquidity management practices to ensure its ability to meet its financial obligations in a timely manner.

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Additional liquidity measure

Masco Corporation's cash conversion cycle has shown fluctuations over the past five years. The cycle increased from 53.35 days as of December 31, 2020, to 66.57 days by the end of December 31, 2022, indicating that the company took longer to convert its investments in inventory and accounts receivable into cash during this period. Subsequently, there was a slight decrease in the cash conversion cycle to 60.66 days by December 31, 2023, and further to 57.13 days by the end of December 31, 2024.

Overall, Masco Corporation has experienced some variability in its cash conversion cycle, which may indicate changes in its efficiency in managing working capital. It is important for the company to closely monitor and manage its cash conversion cycle to ensure optimal utilization of resources and liquidity.