Mueller Water Products (MWA)

The liquidity position of Mueller Water Products over the period from September 2020 to September 2024 reveals notable trends across the current, quick, and cash ratios. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, shows a decline from 3.75 in September 2020 to a low of 2.82 in September 2022, before recovering slightly to 3.33 in September 2024. This indicates that while there was some weakening in liquidity during 2021 and 2022, the company has since restored a strong current asset buffer relative to its current liabilities.

The quick ratio, which excludes inventories to assess more liquid assets, similarly declined from 2.51 in September 2020 to a nadir of 1.57 in September 2022. This ratio then demonstrates an improvement, reaching 2.04 by September 2024, suggesting enhanced short-term liquidity and a better position to cover immediate liabilities without relying on inventory sales.

The cash ratio, representing the most liquid assets relative to current liabilities, exhibits a comparable pattern. It starts at 1.35 in September 2020, decreases significantly to 0.61 in September 2022, reflecting reduced cash availability to cover current obligations. However, it shows a recovery to 1.20 in September 2024, indicating an increase in readily available cash assets and a more robust liquidity stance.

Overall, the observed trend indicates initial strengthening of liquidity in 2020, subsequent weakening during 2021–2022, followed by a recovery through 2023 and into 2024. The fluctuations suggest periodic adjustments in working capital management and liquidity reserves, with recent data pointing to a more stable and improved liquidity position as of September 2024.

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Additional liquidity measure

The analysis of Mueller Water Products' cash conversion cycle (CCC) over the period from September 30, 2020, through September 30, 2024, reveals a trend characterized by fluctuations in the average number of days it takes the company to convert its investments into cash flows.

At the end of fiscal year 2020, the CCC stood at approximately 123.09 days. This figure decreased slightly in 2021 to about 118.52 days, indicating a modest improvement in the company's efficiency in converting its inventory and receivables into cash relative to its payables. However, the subsequent period demonstrated an upward shift, with the CCC rising to approximately 132.53 days in 2022, signaling a reversal of prior efficiency gains or potential deterioration in operational cycles.

The trend continued into 2023, with the CCC reaching approximately 142.88 days, which represents the longest cycle within the analyzed period. This suggests that, on average, the company took an extended period to complete its cash conversion process, potentially due to longer inventory holding periods, extended receivables collection times, or changes in supplier payment terms.

In 2024, there was a slight reduction in the CCC to approximately 141.64 days, yet it remained significantly above the 2020 and 2021 levels. This persistent increase over the years indicates a trend towards lengthening cash conversion durations, which could exert pressure on liquidity and working capital management.

Overall, the data illustrates a gradual elongation of Mueller Water Products' cash conversion cycle over the four-year span. This pattern may reflect shifts in operational processes, market conditions, or payment policies that have historically extended the time needed to convert operating assets into cash. A longer CCC is generally associated with increased working capital requirements and potentially reduced operational efficiency, warranting further analysis of underlying contributors such as inventory management, receivables policies, and payables strategies.