Stepan Company (SCL)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 1.21 1.27 1.32 1.38 1.40 1.46 1.46 1.52 1.56 1.78 1.70 1.77 1.82 1.71 1.76 1.72 2.17 2.31 2.50 2.48
Quick ratio 0.15 0.20 0.19 0.20 0.21 0.18 0.21 0.19 0.26 0.27 0.30 0.39 0.32 0.21 0.27 0.39 0.91 0.94 0.85 0.82
Cash ratio 0.15 0.20 0.19 0.20 0.21 0.18 0.21 0.19 0.26 0.27 0.30 0.39 0.32 0.21 0.27 0.39 0.91 0.94 0.85 0.82

Stepping through the liquidity ratios of Stepan Company reveals a consistent trend over the years. The current ratio, which indicates the company's ability to meet short-term obligations, declined from 2.50 in June 2020 to 1.21 by December 2024. This suggests a decreasing ability to cover current liabilities with current assets over the period.

The quick ratio and cash ratio, both more stringent measures of liquidity that exclude inventory, also showed a similar downward trend. The quick ratio decreased from 0.85 in June 2020 to 0.15 by December 2024, indicating a diminishing ability to cover current liabilities without relying on inventory. The cash ratio followed a similar trajectory, declining from 0.85 in June 2020 to 0.15 by December 2024, implying a decrease in the company's ability to cover its short-term liabilities with cash and cash equivalents alone.

Overall, the liquidity ratios of Stepan Company show a declining trend from 2020 to 2024, indicating a potential liquidity challenge for the company in the latter years of the period analyzed. It is essential for management to closely monitor these ratios and take appropriate actions to maintain sufficient liquidity levels to meet ongoing obligations.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 55.23 56.85 50.45 48.09 47.32 48.49 55.11 57.02 62.62 62.73 55.93 53.93 57.19 58.69 58.30 55.56 53.73 50.56 51.79 48.71

The cash conversion cycle measures how efficiently a company manages its cash flows by analyzing the time it takes for a business to convert its investments in inventory into cash receipts from sales. For Stepan Company, we see fluctuations in its cash conversion cycle over the time period provided in the data.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a low of 47.32 days to a high of 62.73 days. This indicates that Stepan Company's efficiency in managing its cash flows varied over the period under review. A decreasing cash conversion cycle suggests that the company is improving its efficiency in converting its investments into cash, while an increasing cycle may indicate issues such as slow inventory turnover or delayed collections from customers.

The highest cash conversion cycle observed was 62.73 days on September 30, 2022, and then again on December 31, 2022, which could imply challenges in managing working capital during those periods. On the other hand, the lowest cycle was recorded on December 31, 2023, at 47.32 days, indicating a more efficient cash flow management during that quarter.

Overall, fluctuations in Stepan Company's cash conversion cycle over the period signify the importance of continuous monitoring and management of working capital components to ensure optimal cash flow efficiency and operational performance.