Matthews International Corporation (MATW)

Matthews International Corporation's liquidity ratios have shown varying trends over the past five years. The current ratio has been gradually decreasing from 1.82 in 2020 to 1.45 in 2024, indicating a decline in the company's ability to cover its short-term obligations with its current assets.

Similarly, the quick ratio has also been on a downward trend, decreasing from 1.06 in 2020 to 0.57 in 2024. This suggests that the company may have a lower capacity to meet its immediate liabilities without relying on inventory.

On the other hand, the cash ratio has fluctuated over the years, with a notable decrease in 2021 followed by an increase in 2022 and then another decline in 2024. The cash ratio provides insight into the company's ability to cover its current liabilities with its cash and cash equivalents alone, with a lower ratio indicating less liquidity.

Overall, the decreasing trend in both the current and quick ratios, along with fluctuations in the cash ratio, may raise concerns about Matthews International Corporation's liquidity position. Further analysis and monitoring of the company's cash management practices may be warranted to ensure adequate liquidity in the future.

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Additional liquidity measure

The cash conversion cycle of Matthews International Corporation has exhibited fluctuating trends over the last five years. In the most recent fiscal year ending September 30, 2024, the company's cash conversion cycle improved to 79.21 days from 81.19 days in the previous year. This indicates that the company took fewer days to convert its investments in inventory and accounts receivable into cash.

Comparing this improvement to the situation three years ago, in fiscal year 2021, where the cash conversion cycle was 92.36 days, it is evident that Matthews International Corporation has effectively managed its working capital efficiency. The company's performance in converting its assets into cash has been progressively enhancing over the past few years, as seen in the decreasing trend of the cash conversion cycle.

Furthermore, back in fiscal year 2020, the cash conversion cycle was significantly higher at 105.54 days, emphasizing the positive trend of working capital management efficiency within Matthews International Corporation. These improvements indicate that the company has been able to streamline its operations, manage inventory levels, and handle accounts receivable more effectively to enhance cash flow generation.

Overall, the decreasing trend in the cash conversion cycle over the years reflects the company's ability to optimize its working capital management strategies, which is essential for sustaining liquidity, operational efficiency, and overall financial health.