Middleby Corp (MIDD)

Middleby Corp's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has generally been above 1, indicating a healthy liquidity position. The ratio has seen a slight upward trend from 1.81 in 2020 to 2.31 in 2023, reflecting an improvement in the company's ability to meet its short-term obligations.

In contrast, the quick ratio, a more stringent measure of liquidity that excludes inventories from current assets, has been more volatile. The ratio has generally been below 1, indicating a potential liquidity concern, although it has shown some improvement from 0.81 in 2022 to 1.05 in 2023. This suggests that Middleby Corp may have had some challenges in quickly covering its short-term liabilities with its most liquid assets.

Lastly, the cash ratio, which focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents, has also experienced fluctuations. The ratio has ranged from 0.16 in 2019 to 0.38 in 2020, before declining to 0.29 in 2023. This indicates that while Middleby Corp has improved its cash holding relative to its current liabilities over the years, the company may still have limited cash on hand to meet its immediate obligations.

Overall, Middleby Corp's liquidity ratios suggest that the company has maintained a generally sound liquidity position, as indicated by a current ratio consistently above 1. However, the fluctuations in the quick and cash ratios highlight the importance of managing the company's short-term liquidity effectively to ensure it can meet its obligations as they come due.

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Additional liquidity measure

The cash conversion cycle of Middleby Corp has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 132.57 days, showing a slight improvement from the previous year. This indicates that Middleby Corp takes approximately 132.57 days to convert its investments in inventory into cash received from the sale of products or services, including the time it takes to collect receivables from customers.

Comparing to 2021 and 2022, where the cash conversion cycle was 134.06 days and 141.31 days respectively, the company has managed to optimize its cash conversion process more effectively in 2023. However, it is worth noting that the cash conversion cycle in 2020 and 2019 was lower at 110.56 days and 114.80 days, indicating that Middleby Corp took less time to convert its investments into cash during those years.

Overall, Middleby Corp's cash conversion cycle has shown some fluctuations in recent years, with the company making improvements in 2023 compared to the previous year but still performing better in terms of cash conversion back in 2020 and 2019. It is essential for the company to continue monitoring and managing its cash conversion cycle efficiently to optimize its working capital management and enhance overall financial performance.