NewMarket Corporation (NEU)

NewMarket Corp.'s liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

The current ratio has been relatively stable over the past five years, ranging from 1.91 to 2.87. A current ratio above 1 indicates that the company has more current assets than current liabilities, with higher values suggesting a stronger ability to cover short-term obligations. NewMarket Corp.'s current ratio has generally been healthy, with the latest ratio of 2.85 indicating a comfortable liquidity position.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has shown some variability over the years. The quick ratio has ranged from 1.23 to 1.66, indicating the company's ability to cover short-term liabilities without relying on inventory. The latest quick ratio of 1.60 suggests that NewMarket Corp. maintains a reasonable level of liquid assets to meet immediate obligations.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents, has also fluctuated over the years for NewMarket Corp. The cash ratio varies from 0.25 to 0.69, highlighting the company's ability to pay off its short-term liabilities with its cash on hand. The cash ratio as of Dec 31, 2023, stands at 0.41, indicating that NewMarket Corp. has a lower proportion of cash to its current liabilities compared to the previous year but still maintains a reasonable level of liquidity.

In conclusion, based on the liquidity ratios analyzed, NewMarket Corp. appears to have maintained generally sound liquidity positions over the years, with the current ratio, quick ratio, and cash ratio reflecting the company's ability to meet its short-term financial obligations.

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Additional liquidity measure

NewMarket Corp.'s cash conversion cycle has fluctuated over the past five years. The company's cash conversion cycle, a measure of how long it takes to convert its investments in inventory and other resources into cash flows from sales, was 101.14 days at the end of 2023, a decrease from 121.42 days in 2022. This improvement indicates that the company has been more efficient in managing its working capital in 2023.

Comparing to the previous years, the cash conversion cycle was 111.64 days in 2021 and 115.48 days in 2020, both higher than the most recent figure. The company's cycle was shortest at 99.74 days at the end of 2019. Overall, NewMarket Corp. has shown variability in its cash conversion cycle performance over the past five years, with fluctuations likely influenced by changes in inventory management, accounts receivable collection, and accounts payable terms.