MillerKnoll Inc (MLKN)

Based on the provided data, MillerKnoll Inc's liquidity ratios exhibit stability and generally adequate levels over the reporting periods.

1. Current Ratio: The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated slightly but remained above 1.5 in most periods. This indicates that MillerKnoll Inc has sufficient current assets to meet its short-term obligations.

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. Although there have been fluctuations over time, the quick ratio generally stayed below 1.0, indicating that the company may have difficulty meeting its short-term obligations without relying on selling inventory.

3. Cash Ratio: The cash ratio, an even more stringent measure of liquidity that considers only cash and cash equivalents, also remained relatively stable across the periods. This ratio remained below 0.5, suggesting that MillerKnoll Inc holds a modest amount of cash relative to its current liabilities.

In summary, while the current ratio shows that MillerKnoll Inc has been able to cover its short-term obligations with its current assets, the quick and cash ratios indicate that the company may have limited immediate liquidity without considering inventory. It's essential for the company to closely monitor its liquidity position and ensure it has adequate cash reserves to meet any unforeseen short-term financial challenges.

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Additional liquidity measure

The cash conversion cycle of MillerKnoll Inc has shown variability over the reported periods, ranging from 28.47 days to 71.12 days. Generally, a shorter cash conversion cycle indicates better liquidity and efficiency in converting inventory into sales and ultimately into cash.

Looking at the trend, we observe fluctuations in the cash conversion cycle, with some periods showing shorter cycles and others longer. For instance, in September 2022 and December 2022, the company had relatively short cash conversion cycles of 32.84 days and 32.64 days respectively, indicating efficient operations in managing cash flows.

On the other hand, the cycles in August 2022 and February 2025 were longer, at 71.12 days and 70.63 days respectively, suggesting possible challenges in managing working capital, inventory turnover, and accounts receivable collection during those periods.

It is important for MillerKnoll Inc to closely monitor its cash conversion cycle to ensure optimal management of working capital, maintain liquidity, and improve overall operational efficiency. Periodic analysis and comparison with industry benchmarks can help identify areas for improvement and drive strategic decision-making to enhance financial performance.