Regal Beloit Corporation (RRX)

Regal Rexnord Corp's liquidity ratios provide insight into the company's ability to meet its short-term obligations with its current assets.

The current ratio has been fluctuating over the past five years, ranging from 2.25 to 2.99, but generally staying above 2. A current ratio above 2 indicates that the company has more than enough current assets to cover its current liabilities. The slight decrease in 2023 compared to 2022 may be a concern as it suggests that the company may have less liquidity to meet its short-term obligations.

The quick ratio, which excludes inventory from current assets, has also varied over the years but has maintained levels above 1, indicating that the company can cover its current liabilities without relying on selling inventory. A decrease from 2022 to 2023 suggests that the company may have fewer liquid assets readily available to cover short-term liabilities.

The cash ratio, which is the most conservative measure of liquidity, has shown a similar trend as the quick ratio, decreasing from 0.88 in 2021 to 0.62 in 2023. This indicates that Regal Rexnord Corp may have a lower proportion of cash and cash equivalents relative to its current liabilities, potentially impacting its ability to cover immediate short-term obligations.

Overall, while Regal Rexnord Corp's liquidity ratios have generally been at acceptable levels, the slight decreases in 2023 compared to previous years may warrant further investigation to ensure the company's ability to meet its short-term financial obligations remains stable.

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Additional liquidity measure

Regal Rexnord Corp's cash conversion cycle has fluctuated over the past five years. In 2023, the company's cash conversion cycle was 117.05 days, showing an improvement from the previous year's 142.11 days. However, this was higher compared to two years ago when it was 111.68 days. In 2021, the company had a cash conversion cycle of 137.27 days, which increased from the favorable position of 104.43 days in 2019.

Overall, Regal Rexnord Corp's cash conversion cycle has shown variability, indicating potential inefficiencies in managing its cash flows and working capital. It is essential for the company to closely monitor its cash conversion cycle and work towards streamlining its processes to enhance efficiency and optimize its working capital management.