Mueller Industries Inc (MLI)

Mueller Industries Inc's liquidity ratios demonstrate a positive trend over the years, indicating the company's ability to meet its short-term obligations efficiently. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, increased from 2.43 in 2020 to 2.76 in 2024. This suggests that Mueller Industries Inc has improved its liquidity position, with the latest ratio indicating that the company has $2.76 in current assets for every dollar of current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Mueller Industries Inc's quick ratio has shown variability, decreasing from 0.46 in 2020 to 0.23 in 2021, but then significantly improving to 4.00 in 2023 before slightly decreasing to 2.66 in 2024. This demonstrates fluctuations in the company's ability to meet short-term obligations without relying on inventory.

The cash ratio, which measures the company's ability to cover its current liabilities with cash and cash equivalents, follows a similar trend to the quick ratio. It increased substantially from 0.46 in 2020 to 1.95 in 2022, and further to 2.66 in 2024, reflecting an enhanced capacity to settle short-term obligations with readily available cash.

Overall, the increasing current ratio, along with the fluctuating yet generally improving quick and cash ratios, indicate that Mueller Industries Inc has been managing its liquidity effectively and strengthening its ability to meet short-term financial commitments.

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Additional liquidity measure

Mueller Industries Inc's cash conversion cycle has exhibited some fluctuations over the five-year period analyzed. As of December 31, 2020, the company had a cash conversion cycle of 58.48 days, which decreased to 53.43 days by December 31, 2021, indicating an improvement in the efficiency of its working capital management.

However, the cash conversion cycle increased slightly to 57.19 days by December 31, 2022, and remained relatively stable at 57.03 days by December 31, 2023. Subsequently, by December 31, 2024, the cash conversion cycle rose to 61.94 days, indicating a potential delay in converting inventory and receivables into cash.

Overall, Mueller Industries Inc should monitor its cash conversion cycle closely to identify areas for improvement in managing its inventory, accounts receivable, and accounts payable to ensure efficient cash flow management and working capital optimization.