National Presto Industries Inc (NPK)

National Presto Industries Inc has shown a consistent and relatively strong liquidity position over the past five years based on its liquidity ratios. The current ratio has decreased from 8.60 in 2019 to 5.00 in 2023, indicating a decline in the company's ability to cover its short-term liabilities with current assets. However, the current ratio remains above 1, which suggests that the company has sufficient current assets to meet its short-term obligations.

The quick ratio has also exhibited a decreasing trend from 7.16 in 2019 to 2.28 in 2023. This indicates that the company's ability to quickly cover its short-term liabilities with its most liquid assets (excluding inventory) has declined. Despite this decrease, the quick ratio remains above 1, indicating that National Presto Industries Inc still possesses an adequate level of liquid assets to meet its short-term obligations promptly.

The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also decreased over the years from 6.03 in 2019 to 1.58 in 2023. While this decline indicates a reduction in the company's ability to meet its short-term obligations solely with cash, the cash ratio remains above 1, signifying that National Presto Industries Inc has sufficient cash reserves to cover its current liabilities.

Overall, despite the downward trend in the liquidity ratios, National Presto Industries Inc maintains a solid liquidity position with ratios above the industry average and above the critical threshold of 1. This suggests that the company is capable of meeting its short-term financial obligations and has a healthy level of liquidity to support its operations.

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Additional liquidity measure

The cash conversion cycle of National Presto Industries Inc has exhibited some fluctuations over the past five years. In 2023, the company's cash conversion cycle stood at 257.05 days, representing a slight increase compared to the previous year. This indicates that it takes the company approximately 257 days to convert its investments in inventory and receivables into cash.

Comparing this to the data from 2021 and 2020, we can observe a significant increase in the cash conversion cycle, suggesting a prolonged period for the company to convert its assets into cash during those years. In 2021, the cycle was at 196.32 days, but it increased to 197.61 days in 2020. This could imply potential inefficiencies in managing inventory or collecting receivables during those years.

However, looking back at 2019, we see a slightly higher cash conversion cycle of 217.33 days, indicating a longer period required by the company to convert its assets into cash compared to the more recent years.

Overall, fluctuations in the cash conversion cycle can be influenced by various factors such as inventory management, accounts receivable collection efficiency, and accounts payable terms. It is essential for National Presto Industries Inc to closely monitor and manage its cash conversion cycle to optimize its working capital efficiency and overall financial performance.