JM Smucker Company (SJM)

The liquidity position of JM Smucker Company over the specified periods shows notable fluctuations across key ratios.

The current ratio, which measures the company's ability to cover its short-term liabilities with its total current assets, increased from 0.68 on April 30, 2021, to a peak of 1.44 on April 30, 2023, indicating an improving liquidity position and a greater buffer of assets to meet short-term obligations. However, this upward trend was not sustained; by April 30, 2024, the current ratio declined markedly to 0.52, suggesting a weakening liquidity position, and somewhat recovered to 0.81 by April 30, 2025, yet remaining below the threshold of 1.0, which generally indicates potential liquidity concerns.

The quick ratio, reflecting the company's ability to meet short-term liabilities with its most liquid assets excluding inventories, follows a similar pattern. It rose from 0.30 in April 2021 to a high of 0.88 in April 2023, indicating increased liquidity. Yet, it dropped sharply to 0.21 in April 2024, substantially below the previous peak and indicating a limited capacity to cover immediate short-term obligations with quick assets. A slight improvement is observed in April 2025, with the ratio reaching 0.26, still well below 1.0.

The cash ratio, which measures the company's ability to meet liabilities solely with cash and cash equivalents, exhibited significant variability. It was 0.12 in April 2021, decreased to 0.09 in April 2022, then surged to 0.58 in April 2023, reflecting a substantial increase in cash holdings relative to short-term liabilities. Nonetheless, this ratio plummeted to 0.02 in April 2024, suggesting a drastic reduction in available cash assets in relation to current liabilities, before a slight rise to 0.03 in April 2025.

Overall, these ratios indicate periods of strong liquidity around 2023, primarily driven by increased cash holdings and quick assets. However, the subsequent declines, especially in 2024, suggest a deterioration in liquidity management or a depletion of liquid assets. The ratios remaining below 1.0 in recent periods imply cautious liquidity positions, which could pose challenges in meeting short-term liabilities without additional liquidity sources.

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Additional liquidity measure

The cash conversion cycle (CCC) of JM Smucker Company has demonstrated considerable variability over the period from April 30, 2021, to April 30, 2025. As of April 30, 2021, the CCC stood at approximately 18.77 days, indicating that the company took about 19 days to convert its investments in inventory and other resources into cash flows from sales. Over the subsequent year, there was a reduction to around 16.78 days by April 30, 2022, reflecting an improvement in the company's operational efficiency, potentially through shorter inventory holding periods or more efficient receivables management.

However, by April 30, 2023, the cycle dramatically shortened to approximately 1.18 days, suggesting a significant acceleration in cash conversion activities. This could have been driven by optimized inventory turnover, faster receivables collection, or improved supply chain efficiencies. The trend reversed somewhat in the following year, with the CCC increasing to 11.44 days by April 30, 2024, indicating a slight elongation in the company's cash conversion timeline. This may have resulted from changes in receivables or inventory management strategies or shifts in supplier or customer payment terms.

The most recent data point on April 30, 2025, shows the CCC at approximately 20.47 days, exceeding the earlier levels and indicating a lengthening of the cycle. This change suggests that the company experienced either a slowdown in inventory turnover, delays in receivables collection, or a combination of both. Overall, the company's cash conversion cycle exhibits a cyclical pattern with periods of acceleration and deceleration, reflecting ongoing operational adjustments and strategic management of working capital components. The trend toward a shorter cycle in 2023 indicates periods of increased efficiency, whereas the subsequent lengthening in 2024-2025 suggests the need for continued focus on optimizing receivables and inventory management to maintain near-term operational efficiency.