Minerals Technologies Inc (MTX)

Minerals Technologies Inc's liquidity ratios have shown fluctuating trends 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 decreased from 3.50 in 2020 to 2.84 in 2024. This indicates a decline in the company's short-term liquidity position.

Similarly, the quick ratio, also known as the acid-test ratio, has seen a downward trend from 1.26 in 2020 to 0.85 in 2024. The quick ratio excludes inventory from current assets, providing a more stringent measure of liquidity. The decreasing trend in this ratio suggests a potential decrease in the company's ability to meet its short-term obligations without relying on inventory liquidation.

The cash ratio, which focuses solely on the company's most liquid assets (cash and cash equivalents) relative to current liabilities, has mirrored the trend of the quick ratio, declining from 1.26 in 2020 to 0.85 in 2024. This indicates that while the company holds a significant amount of cash, it may not be sufficient to cover its short-term obligations as effectively as in previous years.

Overall, the decreasing trends in both the current ratio, quick ratio, and cash ratio suggest a potential weakening of Minerals Technologies Inc's liquidity position over the observed period. Management may need to assess and potentially improve the company's short-term liquidity management to ensure it can meet its obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle (CCC) of Minerals Technologies Inc has fluctuated over the years based on the provided data. In 2020, the CCC was 76.17 days, indicating that the company took approximately 76 days to convert its investments in inventory and other resources into cash flows from sales.

In 2021, the CCC increased slightly to 77.12 days, possibly indicating a delay in converting resources to cash or a longer collection period for receivables.

The CCC dropped to 76.67 days in 2022 but then decreased significantly to 70.97 days in 2023. This decrease suggests that the company efficiently managed its working capital during that period, leading to a quicker conversion of investments into cash.

However, in 2024, the CCC increased again to 79.49 days, possibly due to changes in inventory management or collection practices impacting the company's cash conversion efficiency.

Overall, the fluctuations in the CCC indicate varying effectiveness in managing working capital and converting resources into cash across the years analyzed. Further analysis of the components contributing to the CCC, such as inventory turnover, receivables collection period, and payables payment period, could provide insights into specific areas for improvement in managing cash flows.