Silgan Holdings Inc (SLGN)

The liquidity ratios of Silgan Holdings Inc. provide insight into the company's ability to meet its short-term obligations using its current assets. The current ratio has been declining over the past five years from 1.38 in 2019 to 1.02 in 2023. Although the current ratio is still above 1, indicating that the company has more current assets than current liabilities, the decreasing trend may raise concerns about its ability to cover short-term obligations.

The quick ratio, which excludes inventory from current assets, has also shown a decreasing trend from 0.76 in 2019 to 0.61 in 2023. This suggests that Silgan Holdings Inc. may have become less capable of meeting its immediate liabilities without relying on inventory, which could potentially be less liquid.

Furthermore, the cash ratio, representing the most conservative measure of liquidity, has fluctuated over the years but generally trended upwards from 0.26 in 2019 to 0.35 in 2023. This indicates that the company has been holding more cash to cover its current liabilities, which is a positive sign for short-term liquidity.

Overall, while the current ratio shows that Silgan Holdings Inc. has enough current assets to cover current liabilities, the declining trend in both the current and quick ratios raises concerns about the company's short-term liquidity position. The increasing cash ratio, however, suggests an improvement in the company's ability to cover immediate obligations with its available cash resources.

---

Additional liquidity measure

The cash conversion cycle of Silgan Holdings Inc. has fluctuated over the past five years. In 2023, it stood at 26.67 days, showing an increase from 2022 and 2021 where the cycle was 23.53 days and 20.08 days, respectively. This indicates a potential inefficiency in managing the company's working capital and converting inventory and receivables into cash.

The company experienced a significant increase in its cash conversion cycle in 2020, which was 34.69 days, compared to the previous two years. However, the cycle was slightly lower in 2019 at 31.96 days. Overall, the trend in recent years suggests that Silgan Holdings Inc. may be facing challenges in optimizing its cash flow operations and working capital management.

It is essential for Silgan Holdings Inc. to focus on improving its inventory turnover, accounts receivable collection, and accounts payable management to shorten its cash conversion cycle. By doing so, the company can enhance its liquidity position, reduce financing costs, and potentially improve its overall financial performance.