Sealed Air Corporation (SEE)

Sealed Air Corporation's liquidity ratios show fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, decreased from 1.38 in 2020 to 1.02 in 2022 before slightly improving to 1.16 in 2024. This suggests a weakening liquidity position in the short term, although the ratio improved from 2022 to 2024.

The quick ratio, a more conservative measure of liquidity that excludes inventory from current assets, also experienced a decline from 0.40 in 2020 to 0.22 in 2022, remaining relatively stable at 0.23 in 2023 and 2024. This indicates that Sealed Air Corporation may have had difficulty meeting its short-term obligations with its most liquid assets in 2022, but the ratio stabilized in the following years.

The cash ratio, which specifically focuses on a company's ability to cover its short-term liabilities with its cash and cash equivalents, mirrored the trend of the quick ratio, decreasing from 0.40 in 2020 to 0.22 in 2022 before stabilizing at 0.23 in 2023 and 2024. This suggests that Sealed Air Corporation's cash position weakened in 2022 but then remained steady in the subsequent years.

Overall, the liquidity ratios of Sealed Air Corporation indicate some fluctuations in its ability to meet short-term obligations with its current assets, but the company managed to stabilize its liquidity position in recent years. Monitoring these ratios over time will be essential to assess the company's ongoing liquidity health.

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Additional liquidity measure

The cash conversion cycle of Sealed Air Corporation has shown some fluctuations over the past five years. In December 2020, the company's cash conversion cycle stood at 66.12 days, indicating that it took approximately 66.12 days for the company to convert its investments in inventory into cash receipts from customers.

However, by December 2022, the cash conversion cycle had increased to 81.73 days, reflecting a prolonged period for the company to convert its resources into cash. This could suggest potential inefficiencies in managing inventory, collecting receivables, or paying suppliers.

Subsequently, there was a slight improvement in the cash conversion cycle by the end of December 2024, where it decreased to 69.97 days. Despite this improvement, Sealed Air Corporation still experienced a longer cash conversion cycle compared to the earlier years within the analyzed period.

Overall, Sealed Air Corporation should focus on optimizing its cash conversion cycle by efficiently managing its inventory levels, collecting receivables promptly, and negotiating favorable payment terms with suppliers to enhance its cash flow and operational efficiency.