Mattel Inc (MAT)

Based on the provided data, let's analyze the liquidity ratios of Mattel Inc:

1. Current Ratio:
- The current ratio measures the company's ability to pay its short-term obligations with its current assets. A higher current ratio indicates better liquidity.
- Mattel Inc's current ratio has shown a consistent improvement over the years, from 1.83 in 2020 to 2.38 in 2024.
- This indicates that Mattel Inc has increased its ability to cover its short-term liabilities with its current assets, which is a positive sign for the company's liquidity position.

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.
- Mattel Inc's quick ratio has also demonstrated an upward trend over the years, from 0.56 in 2020 to 1.05 in 2024.
- The quick ratio improvement suggests that Mattel Inc has enhanced its ability to meet its immediate short-term obligations without relying on selling inventory, which is favorable for its liquidity position.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover current liabilities.
- Mattel Inc's cash ratio has followed the same trend as the quick ratio, increasing from 0.56 in 2020 to 1.05 in 2024.
- This indicates that Mattel has gradually improved its ability to fulfill its short-term obligations using only cash and cash equivalents, which signifies a strengthened liquidity position.

In summary, based on the analysis of the current ratio, quick ratio, and cash ratio, Mattel Inc has exhibited consistent progress in its liquidity position over the years, with increasing ratios indicating an enhanced ability to meet its short-term obligations. This suggests a positive trend in the company's liquidity management and financial stability.

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Additional liquidity measure

The cash conversion cycle of Mattel Inc has shown fluctuations over the past five years. In 2020, the company's cash conversion cycle stood at 80.28 days. Over the following years, the cycle increased to 100.20 days in 2021, further rising to 110.50 days in 2022. However, Mattel Inc managed to significantly reduce its cash conversion cycle to 73.01 days in 2023 and further improved to 69.22 days in 2024. This indicates that the company was able to manage its cash flows more efficiently in the latter years compared to the earlier years, resulting in a shorter cash conversion cycle. A shorter cash conversion cycle implies that the company is able to convert its investments in inventory into cash more quickly, thereby enhancing its liquidity position and operational efficiency.