Scotts Miracle-Gro Company (SMG)

Liquidity ratios

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 Dec 31, 2019
Current ratio 1.31 1.80 1.83 2.20 1.81 1.69 2.07 2.47 2.06 2.42 2.21 2.51 1.77 2.15 1.91 1.59 1.28 1.61 2.08 2.19
Quick ratio 0.33 0.93 0.89 0.41 0.46 0.57 0.78 0.38 0.52 0.66 0.69 0.36 0.82 1.29 0.92 0.54 0.52 0.92 1.05 0.36
Cash ratio 0.10 0.34 0.07 0.03 0.06 0.03 0.03 0.04 0.21 0.03 0.01 0.02 0.40 0.27 0.01 0.21 0.02 0.04 0.03 0.04

The liquidity ratios of Scotts Miracle-Gro Company indicate the firm's ability to meet its short-term obligations and manage its current financial resources.

The current ratio, which compares current assets to current liabilities, has shown some fluctuations over the period analyzed. While the ratio has generally been above 1, indicating the company's ability to cover its short-term liabilities, there has been some variability in its level. The ratio peaked at 2.51 in December 2021 but decreased to 1.31 by September 2024.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, reveals a more conservative picture of the company's liquidity position. This ratio has also fluctuated over time, with a notable decline in December 2023 and a subsequent recovery. The quick ratio ranged from a low of 0.36 in June 2022 to a high of 1.29 in March 2021.

The cash ratio, which provides an even more conservative view by considering only cash and cash equivalents to cover current liabilities, has also shown variability. The trend in the cash ratio suggests that the company has had periods of lower liquidity, with a notable improvement to 0.40 in September 2021 before dropping to 0.10 in September 2024.

Overall, while the current ratio generally indicates that Scotts Miracle-Gro Company has been able to meet its short-term obligations, the quick and cash ratios suggest that the company's liquidity position has been more constrained, with fluctuations over the period analyzed. It is important for the company to carefully manage its liquidity to ensure it can meet its obligations in a timely manner.

Additional liquidity measure

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 Dec 31, 2019
Cash conversion cycle days 55.19 84.82 138.46 118.65 94.13 128.98 167.87 129.73 106.81 152.64 178.09 132.04 80.67 118.16 131.69 81.69 65.86 116.58 159.25 92.96

The cash conversion cycle of Scotts Miracle-Gro Company has shown fluctuations over the past several quarters. The company's ability to convert its investments in inventory into cash has varied significantly.

Looking at the trend, we observe that the cash conversion cycle has ranged from a low of 55.19 days in September 2024 to a high of 178.09 days in June 2022. This indicates that the company has experienced periods of more efficient cash conversion as well as times when the conversion process took longer.

In general, a shorter cash conversion cycle is preferred as it signifies that the company is able to collect cash from its sales and convert its inventory back into cash more quickly. On the contrary, a longer cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers.

It's important for Scotts Miracle-Gro Company to monitor and analyze the factors contributing to the fluctuations in its cash conversion cycle to identify opportunities for improvement and to ensure optimal cash flow management.