Newell Brands Inc (NWL)

Newell Brands Inc's liquidity ratios provide insights into the company's ability to meet its short-term financial obligations.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets.
- Newell Brands Inc's current ratio has remained relatively stable over the years, ranging from 1.14 to 1.32.
- A current ratio above 1 indicates that the company has sufficient current assets to cover its current liabilities.
- In the most recent year, the current ratio decreased slightly to 1.14, which may indicate a potential liquidity pressure.

2. Quick Ratio:
- The quick ratio (acid-test ratio) is a more stringent test of liquidity as it excludes inventory from current assets.
- Newell Brands Inc's quick ratio has been decreasing year over year, ranging from 0.08 to 0.27.
- A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without relying on selling inventory.
- The significant drop in the quick ratio from 2020 to 2021 raises concerns about the company's ability to meet its immediate liabilities.

3. Cash Ratio:
- The cash ratio is the most conservative measure of liquidity as it considers only cash and cash equivalents to cover current liabilities.
- Newell Brands Inc's cash ratio has followed a similar trend to the quick ratio, declining from 0.27 to 0.08.
- A cash ratio below 1 indicates that the company may struggle to pay off its short-term debt obligations solely with cash on hand.
- The decreasing cash ratio suggests a potential strain on the company's ability to meet its immediate cash requirements.

Overall, while Newell Brands Inc's current ratio indicates a moderate level of liquidity, the declining trend in the quick ratio and cash ratio raises concerns about the company's ability to meet its short-term obligations without relying heavily on inventory or cash reserves. Further monitoring of liquidity management strategies may be necessary to ensure financial stability.

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Additional liquidity measure

Newell Brands Inc's cash conversion cycle has fluctuated over the past few years. As of December 31, 2020, the company had a cash conversion cycle of 94.81 days, which increased to 99.95 days by December 31, 2021, showing a slight deterioration in efficiency. Subsequently, by December 31, 2022, the cash conversion cycle extended further to 121.37 days, indicating a significant delay in the conversion of resources into cash.

However, there was an improvement in the cash conversion cycle by December 31, 2023, falling to 96.68 days. This reduction suggests a better management of working capital and a quicker conversion of inventory and receivables into cash. Nevertheless, by December 31, 2024, the cash conversion cycle increased again to 101.51 days, albeit not as high as in 2022.

Overall, Newell Brands Inc's cash conversion cycle has shown fluctuations, indicating variations in the efficiency of the company in managing its working capital and converting its assets into cash over the years. It would be essential for the company to focus on optimizing its operations to reduce the cash conversion cycle and improve liquidity.