National Presto Industries Inc (NPK)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 6.05 | 5.00 | 6.09 | 6.55 | 6.48 |
| Quick ratio | 0.37 | 1.58 | 1.78 | 2.71 | 2.81 |
| Cash ratio | 0.37 | 1.58 | 1.78 | 2.71 | 2.81 |
National Presto Industries Inc's liquidity ratios show a strong current ratio, which has been consistently above 5 in recent years, indicating the company's ability to cover its short-term obligations with its current assets. However, the current ratio slightly decreased from 6.55 in 2021 to 6.05 in 2024, which may suggest a slight decline in liquidity.
The quick ratio, reflecting the company's ability to meet its short-term liabilities with its most liquid assets, has shown a decreasing trend over the years, dropping from 2.81 in 2020 to 0.37 in 2024. This decline may raise concerns about the company's ability to quickly settle its obligations using only its most liquid assets.
Furthermore, the cash ratio, which provides a more conservative measure of liquidity by considering only cash and cash equivalents, has also decreased over the years from 2.81 in 2020 to 0.37 in 2024. This indicates a diminishing ability to cover short-term liabilities with cash on hand alone.
In summary, while National Presto Industries Inc maintains a solid current ratio, the downward trend in both the quick ratio and cash ratio suggests a potential decrease in liquidity and may warrant further investigation into the company's efficiency in managing its short-term obligations.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 327.68 | 254.16 | 208.37 | 180.21 | 184.73 |
The cash conversion cycle for National Presto Industries Inc has shown a fluctuating trend over the years, starting at 184.73 days in December 31, 2020, improving to 180.21 days in December 31, 2021, but then increasing significantly to 208.37 days in December 31, 2022. This upward trend continued with 254.16 days in December 31, 2023, and peaked at 327.68 days by December 31, 2024.
The increasing trend observed in the cash conversion cycle indicates that the company is taking longer to convert its investments in inventory into cash. This may suggest challenges in managing inventory levels efficiently, collecting receivables promptly, or managing payables effectively. It is crucial for the company to analyze the underlying causes for this trend and implement strategies to improve its cash conversion cycle in order to optimize its working capital management.