Mueller Water Products (MWA)

The analysis of Mueller Water Products’ liquidity ratios over the period from June 2020 through March 2025 reveals a generally stable liquidity position with some notable fluctuations and trends.

Current Ratio:
The current ratio has consistently remained above 2. indicating a solid liquidity position throughout the period. Starting at 3.69 in June 2020, it experienced a steady increase, peaking at 4.24 in December 2020, indicating strong short-term liquidity. Subsequently, the ratio showed some fluctuations, decreasing to a low of 2.82 in September 2022 but generally maintaining a level above 3.0 in the subsequent periods, ending at 3.79 in March 2025. This pattern suggests that the company maintains a robust buffer of current assets relative to current liabilities, evidencing prudent liquidity management.

Quick Ratio:
The quick ratio followed a similar trend, remaining comfortably above 1.5 throughout the period. It peaked at 2.86 in December 2020 and experienced a decline to a low of 1.53 in December 2022. After this point, the ratio recovered, reaching 2.34 by March 2025. This indicates that even without relying on inventory, the company maintains sufficient liquid assets to cover immediate liabilities, reflecting a sound short-term liquidity position with some variability aligned with operational needs.

Cash Ratio:
The cash ratio displayed more volatility, reflecting the cash holdings relative to current liabilities. It started at 1.18 in June 2020, increasing to a peak of 1.62 in December 2020, then experiencing a decline to less than 1.0 by March 2023, reaching lows of 0.47 in March 2023. Following this trough, the ratio recovered, surpassing 1.0 again in December 2024 and continuing to display a positive trend through March 2025, ending at 1.40. The fluctuations suggest periodic adjustments in cash holdings, with the company managing liquidity buffers actively, maintaining a generally adequate level of cash relative to current obligations.

Overall Summary:
Across the analyzed period, Mueller Water Products consistently exhibits healthy liquidity ratios, with the current ratio and quick ratio indicating a strong capacity to meet short-term liabilities. The cash ratio, while variable, has managed to stay above or near 1.0 in most periods, aligning with a management approach that balances cash reserves with operational needs. The observed stability and range of these ratios suggest effective liquidity management, capable of supporting operational flexibility and financial stability during the period assessed.

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Additional liquidity measure

The analysis of Mueller Water Products' cash conversion cycle (CCC) over the specified period reveals notable fluctuations and trends. Initially, as of June 30, 2020, the CCC stood at approximately 132.28 days, with a gradual decline observed through September and December 2020, reaching around 123.27 days by the end of 2020. The early 2021 period showed a slight decrease, with the cycle dipping to approximately 116.88 days by June 30, 2021, indicating an improvement in the company's liquidity and operational efficiency.

However, during the subsequent months, the CCC experienced an upward trend. From September 2021 to June 2022, the cycle increased from around 114.68 days to approximately 137.59 days, suggesting a lengthening of the time taken to convert investments in inventory and receivables into cash. The cycle continued to fluctuate, reaching approximately 140.64 days at the end of 2022 and further upward to about 148.70 days by March 2023.

Over the course of 2024, the CCC demonstrated signs of both escalation and subsequent reduction. It peaked at approximately 161.35 days in March 2024, indicating a significant elongation in cash conversion efficiency. Following this peak, the cycle demonstrated a decreasing trend, reaching roughly 130.64 days as of December 2024. The data for March 2025 shows a slight increase to approximately 137.71 days.

Overall, the company's cash conversion cycle exhibits considerable variability over the observed period. Periods of tightening, such as in late 2020 and late 2024, contrast with extended cycles in early 2023 and early 2024, indicating fluctuations in inventory management, receivables collection, and payables practices. These dynamics reflect ongoing operational adjustments and shifting efficiencies in working capital management, which impact the firm's liquidity and operational cash flow profile.