Reliance Steel & Aluminum Co (RS)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 5.66 | 3.55 | 3.91 | 5.08 | 4.46 |
| Quick ratio | 3.07 | 2.02 | 1.86 | 2.63 | 1.89 |
| Cash ratio | 1.28 | 0.85 | 0.28 | 1.12 | 0.26 |
Reliance Steel & Aluminum Co.'s liquidity ratios have shown varying trends over the past five years. Starting with the current ratio, which indicates the company's ability to cover its short-term obligations with its current assets, there has been fluctuation in the values. The current ratio increased from 4.46 in 2019 to 5.66 in 2023, indicating an improvement in the company's liquidity position.
Moving to the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we can see a similar pattern of fluctuation. The quick ratio increased from 2.02 in 2019 to 3.23 in 2023, suggesting an enhanced ability to cover short-term obligations without relying on inventory.
Lastly, the cash ratio, which measures the company's ability to meet its short-term liabilities using only cash and cash equivalents, has shown significant improvement from 0.38 in 2019 to 1.45 in 2023. This indicates a strengthened liquidity position and ability to meet obligations without relying on non-cash assets.
Overall, the liquidity ratios of Reliance Steel & Aluminum Co. have shown positive trends over the years, indicating an improved ability to cover short-term obligations and maintain financial stability.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 83.50 | 74.67 | 92.79 | 108.66 | 102.20 |
The cash conversion cycle of Reliance Steel & Aluminum Co. has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 95.27 days from the previous year's 83.42 days. This indicates that it took the company longer to convert its investments in inventory into cash receipts from customers in 2023.
Comparing to 2021 and 2022, where the cash conversion cycle was 104.82 days and 108.66 days respectively, the company improved its efficiency in managing its cash flow in 2023. However, looking back to 2019, when the cash conversion cycle was 102.20 days, the company was more effective in converting its cash investments into cash receipts that year.
Overall, it is important for Reliance Steel & Aluminum Co. to consistently monitor and potentially improve its cash conversion cycle in order to effectively manage its working capital and liquidity position.