Matson Inc (MATX)

Matson Inc's liquidity ratios exhibit fluctuations over the past five years.

The current ratio, a measure of the company's ability to cover short-term liabilities with its current assets, declined in 2020 but has since improved, reaching 1.07 in 2023. This suggests that Matson Inc's current assets are now slightly more sufficient to cover its short-term obligations compared to the prior year.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, displays a similar pattern of improvement over the years. Matson Inc's quick ratio stood at 1.07 in 2023, indicating that the company's ability to meet short-term liabilities with its most liquid assets has improved.

The cash ratio, representing the most conservative measure of liquidity, also shows a positive trend. Matson Inc's cash ratio increased from 0.09 in 2020 to 0.35 in 2023, indicating a stronger ability to cover short-term liabilities solely with cash on hand.

Overall, Matson Inc's liquidity ratios have shown a positive trajectory in recent years, reflecting an enhanced ability to meet short-term obligations. However, it is essential for the company to continue monitoring and managing its liquidity position to ensure ongoing financial stability and flexibility.

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Additional liquidity measure

The cash conversion cycle measures how long it takes for a company like Matson Inc to convert its investments in inventory and other resources into cash receipts from sales.

Looking at the trend over the past five years, Matson Inc's cash conversion cycle has been volatile. In 2019 and 2020, the company managed negative cash conversion cycles, indicating efficient management of its working capital. This means that the company was able to collect cash from its customers before having to pay its suppliers for inventory, which is a favorable position.

However, in 2021 and especially in 2022 and 2023, the cash conversion cycle increased significantly. This suggests that Matson Inc took longer to convert its investments in inventory into cash during these years, which may indicate potential issues with inventory management, accounts receivable collection, or payment to suppliers.

Generally, a shorter cash conversion cycle is desirable as it indicates efficient working capital management. Matson Inc may need to investigate the reasons behind the longer cash conversion cycle in recent years and work on strategies to optimize its working capital efficiency.