MillerKnoll Inc (MLKN)

MillerKnoll Inc's liquidity ratios provide insight into the company's ability to meet short-term financial obligations. Let's analyze the liquidity ratios over the past five years:

1. Current Ratio:
The current ratio measures the company's ability to pay its short-term liabilities with its short-term assets. MillerKnoll's current ratio has fluctuated over the past five years, ranging from 1.48 to 1.78. The higher current ratios in 2021 and 2020 suggest a stronger ability to cover short-term obligations, while the lower ratios in 2019 and 2022 indicate a relatively weaker position. The current ratio for 2023 stands at 1.67, indicating improvement compared to the previous year.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. MillerKnoll's quick ratio has also shown fluctuations, with a range of 0.83 to 1.40 over the past five years. The quick ratio for 2023 is 0.98, which is an improvement over the previous year. However, it remains below 1, suggesting that the company may have difficulty meeting its short-term obligations without relying on inventory liquidation.

3. Cash Ratio:
The cash ratio measures the company's ability to cover its short-term liabilities with its cash and cash equivalents. MillerKnoll's cash ratio has fluctuated significantly over the past five years, with a range of 0.40 to 1.01. The decreasing trend in the cash ratio for 2023, which stands at 0.46, indicates a lower ability to cover short-term liabilities with cash and cash equivalents compared to the previous year.

Overall, while MillerKnoll Inc's current ratio has improved in 2023, the quick ratio and cash ratio show mixed results. The company should continue to monitor its liquidity position to ensure it has sufficient resources to meet its short-term obligations.

---

Additional liquidity measure

The cash conversion cycle (CCC) is a key metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. It is calculated as the sum of days inventory outstanding (DIO), days sales outstanding (DSO), and days payables outstanding (DPO). A lower CCC indicates that the company is more efficient in managing its working capital and converting its investments into cash.

Looking at the data for MillerKnoll Inc, we can see that the cash conversion cycle has fluctuated over the past five years. In Jun 3, 2023, the CCC was 62.39 days, slightly lower than the previous year's figure of 67.91 days. This indicates that the company has improved its efficiency in managing working capital over the past year.

Comparing this to the data from the previous years, we can observe a trend of fluctuating CCC. In May 29, 2021, the CCC was 41.21 days, indicating extremely efficient management of working capital. However, in the following year, the CCC increased to 45.15 days, before further increasing to 67.91 days in May 28, 2022.

The trend suggests that the company may have faced challenges in managing its working capital effectively in the past two years, leading to an increase in the time it takes to convert investments into cash. However, the improvement in the most recent year's CCC indicates that the company may have implemented measures to address these challenges.

It's essential for MillerKnoll Inc to closely monitor its CCC and identify the drivers behind the fluctuations. Additionally, the company should focus on strategies to optimize its inventory management, sales collection processes, and payables management to ensure a more consistent and efficient cash conversion cycle.

Overall, the fluctuating trend in the cash conversion cycle for MillerKnoll Inc highlights the importance of effectively managing working capital to improve cash flow and operational efficiency.