Sylvamo Corp (SLVM)

The liquidity ratios of Sylvamo Corp provide insights into the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has been relatively stable over the past five quarters, ranging from 1.67 to 1.76. This indicates that Sylvamo Corp has a healthy level of current assets to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventories from current assets. Sylvamo Corp's quick ratio has fluctuated over the quarters, ranging from 0.97 to 1.21. While the ratio fell below 1 in some quarters, indicating a potential challenge in meeting immediate obligations without relying on inventory, it has generally remained close to or above 1, suggesting a reasonable ability to cover short-term liabilities.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents in relation to current liabilities, shows a declining trend for Sylvamo Corp from 0.59 in Q4 2022 to 0.43 in Q4 2023. This may indicate a decreasing ability to cover short-term obligations solely with cash on hand.

Overall, Sylvamo Corp's liquidity ratios demonstrate a generally stable liquidity position with the current and quick ratios indicating sufficient short-term asset coverage for liabilities. However, the declining trend in the cash ratio may warrant further monitoring to ensure the company maintains adequate cash reserves for any unforeseen liquidity needs.

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Additional liquidity measure

The cash conversion cycle for Sylvamo Corp has exhibited fluctuations over the past five quarters. In Q4 2022, the company's cash conversion cycle was relatively low at 32.87 days, indicating a efficient management of cash flow within the firm. However, in the subsequent quarters, there was a noticeable increase in the cash conversion cycle, reaching its peak in Q2 2023 at 56.71 days, suggesting a longer period for the company to convert its investments in inventory and other resources into cash.

The trend continued in Q3 and Q4 2023, although there was a slight improvement in Q4 compared to Q3. This increase in the cash conversion cycle may imply that Sylvamo Corp is facing challenges in managing its working capital efficiently, possibly due to inventory management issues, slow accounts receivable collection, or payment delays to suppliers.

Overall, the fluctuating cash conversion cycle indicates a need for Sylvamo Corp to focus on streamlining its operations to shorten the cycle and improve its cash flow management. This could involve implementing better inventory control measures, negotiating favorable payment terms with suppliers, and enhancing accounts receivable collection processes to optimize the company's liquidity position and overall financial performance.