Newell Brands Inc (NWL)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 1.16 | 1.32 | 1.31 | 1.28 | 1.38 |
| Quick ratio | 0.53 | 0.50 | 0.59 | 0.74 | 0.74 |
| Cash ratio | 0.12 | 0.10 | 0.14 | 0.27 | 0.12 |
Newell Brands Inc's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio has shown a declining trend over the past five years, from 1.38 in 2019 to 1.16 in 2023. This suggests a potential weakening in the company's ability to cover its current liabilities with current assets.
The quick ratio, which excludes inventory from current assets, has fluctuated over the years but generally remained below 1, indicating that Newell Brands may have difficulty meeting its short-term obligations using only its most liquid assets.
Furthermore, the cash ratio, which is the most conservative liquidity measure, has also shown variability, reaching its lowest point at 0.19 in 2022 before improving slightly to 0.22 in 2023. This implies that Newell Brands may have limited cash available to cover its immediate liabilities.
Overall, the trend in Newell Brands Inc's liquidity ratios suggests a need for the company to closely monitor its ability to meet short-term obligations and maintain sufficient liquidity levels. Further analysis of the company's cash flow and working capital management may provide insights into improving its liquidity position.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 78.89 | 94.54 | 68.31 | 71.66 | 87.39 |
The cash conversion cycle of Newell Brands Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle improved to 86.97 days from 111.10 days in 2022. This indicates that the company took fewer days to convert its investment in inventory and accounts receivable into cash during the most recent period, which may suggest improved efficiency in managing working capital.
Comparing to 2021, where the cash conversion cycle was 67.57 days, the increase in 2023 may imply a slower conversion of inventory and receivables into cash. Despite this increase, Newell Brands Inc's cash conversion cycle in 2023 was still better than in 2020 and 2019, where it took the company 71.74 days and 97.58 days, respectively, to convert its working capital into cash.
Overall, while the company's cash conversion cycle improved in 2023 compared to the previous year, further analysis would be warranted to understand the underlying factors contributing to this trend and to assess the company's overall liquidity and efficiency in managing its working capital.