Mohawk Industries Inc (MHK)

The liquidity ratios of Mohawk Industries, Inc. provide insight into the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a fluctuating trend over the past five years. The current ratio decreased from 2.26 in 2020 to 1.78 in 2021 before increasing to 1.92 in 2022 and then dropping to 1.78 in 2023. This indicates that while the company may have a relatively strong ability to cover its current liabilities with current assets, there has been some variability in its short-term liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has shown variability over the years. The ratio decreased from 1.46 in 2020 to 0.97 in 2021 and 2023, with a slight increase to 1.01 in 2022. This suggests that the company may have a relatively lower ability to cover its short-term liabilities with its most liquid assets.

The cash ratio, which is the most stringent liquidity measure, focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents. Mohawk Industries, Inc.'s cash ratio has also fluctuated over the years, with a notable increase from 0.23 in 2019 to 0.73 in 2020, followed by a decrease to 0.34 in 2021, 0.39 in 2022, and 0.37 in 2023. This indicates that the company may have a decreasing ability to cover its short-term obligations with cash resources alone.

In summary, while Mohawk Industries, Inc. has generally maintained positive liquidity ratios over the years, there has been some fluctuation in its short-term liquidity position, especially in the quick and cash ratios. It is important for the company to closely monitor these ratios to ensure its ability to meet its short-term financial commitments.

---

Additional liquidity measure

The cash conversion cycle of Mohawk Industries, Inc. has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle was 127.03 days, which was slightly lower compared to the previous year's cycle of 129.79 days. However, it was higher than the cycle reported in 2021 and 2020, which were 113.48 days and 111.25 days, respectively.

Overall, Mohawk Industries, Inc. has experienced variability in its cash conversion cycle performance, with some years showing improvements while others demonstrated higher working capital requirements. This variability may be indicative of changes in the company's operational efficiency, inventory management, and accounts receivable collection processes. Further analysis and monitoring of the cash conversion cycle will be essential to assess the company's liquidity management and working capital efficiency.