Mercer International Inc (MERC)

Mercer International Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations effectively. The current ratio, which measures the company's current assets relative to its current liabilities, has shown a fluctuating trend over the past five years, ranging from 3.12 to 4.13. An upward trend in the current ratio signifies improved liquidity and indicates the company's ability to cover its short-term liabilities with its current assets.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Mercer International Inc.'s quick ratio has shown a similar fluctuating trend, ranging from 1.92 to 2.85 over the same period. A higher quick ratio indicates a stronger ability to meet short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with the most liquid asset, cash. Mercer International Inc.'s cash ratio has also fluctuated over the past five years, ranging from 1.03 to 1.85. A higher cash ratio indicates a stronger ability to cover short-term liabilities with cash on hand.

Overall, Mercer International Inc. has maintained healthy liquidity ratios over the years, with the current, quick, and cash ratios generally above industry averages. The fluctuating trends suggest variations in the company's working capital management and cash flow generation. Investors and stakeholders should continue to monitor these ratios to assess the company's short-term liquidity position.

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Additional liquidity measure

Mercer International Inc.'s cash conversion cycle has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle decreased to 118.77 days from 127.53 days in 2022, indicating an improvement in managing its working capital. However, compared to 2021 and 2020, the company's cash conversion cycle remains relatively high.

The trend over the past five years suggests that Mercer International Inc. has been able to convert its investments in raw materials into cash at a slower pace, which could potentially indicate inefficiencies in managing inventory or collecting receivables. It is important for the company to continue monitoring and improving its cash conversion cycle to optimize its working capital management and enhance liquidity.