Resideo Technologies Inc (REZI)

The liquidity ratios of Resideo Technologies Inc have shown fluctuations over the past five years.

1. Current Ratio:
- The current ratio measures the company's ability to meet its short-term obligations with its current assets.
- Resideo's current ratio has been generally increasing from 2019 to 2023, indicating an improving liquidity position.
- The current ratio increased from 1.19 in 2019 to 1.80 in 2023, which suggests that the company's current assets have been increasing in proportion to its current liabilities.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets.
- Resideo's quick ratio has also shown an increasing trend over the past five years, indicating a strengthening ability to meet short-term obligations without relying on inventory.
- The quick ratio improved from 0.75 in 2019 to 1.18 in 2023, reflecting a more liquid position.

3. Cash Ratio:
- The cash ratio specifically assesses the company's ability to cover its current liabilities with its cash and cash equivalents.
- Resideo's cash ratio has shown variability over the five-year period, with fluctuations in the level of cash reserves relative to current liabilities.
- The cash ratio increased significantly from 0.20 in 2019 to 0.54 in 2023, indicating a higher proportion of cash reserves available to cover short-term obligations.

Overall, Resideo Technologies Inc's liquidity ratios have generally improved over the past five years, as indicated by increasing current, quick, and cash ratios. These improvements suggest a more robust liquidity position and an enhanced ability to meet its short-term financial obligations. However, further analysis and consideration of other financial metrics are necessary to obtain a comprehensive view of the company's overall financial health.

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Additional liquidity measure

The cash conversion cycle of Resideo Technologies Inc has shown variability over the past five years. In 2023, the company's cash conversion cycle increased to 59.79 days from 63.84 days in the previous year. This indicates a slight deterioration in the efficiency of converting its resources into cash during the latest period.

Comparing to 2021, where the cash conversion cycle was 42.51 days, the company took longer to convert its investments in inventory and accounts receivable into cash. However, it is worth noting that in 2020 and 2019, Resideo Technologies Inc managed to reduce its cash conversion cycle to 36.48 days and 35.85 days, respectively, reflecting better operational efficiency in managing its working capital.

Overall, the trend in Resideo Technologies Inc's cash conversion cycle suggests some fluctuations in the recent years, and the company may need to focus on optimizing its inventory management and accounts receivable collection processes to enhance its cash conversion efficiency.