SPX Corp (SPXC)

The liquidity ratios of SPX Corp indicate a mixed picture over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a positive trend overall. Starting at 1.17 in 2020, the current ratio increased steadily to 2.16 in 2022 before experiencing a slight decline to 1.87 in 2024. This suggests that the company has improved its liquidity position over the years but may have faced some challenges in managing its short-term obligations in the most recent year.

In contrast, the quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has been more volatile. The ratio was extremely low at 0.12 in 2020, indicating potential difficulties in meeting immediate liabilities without relying on inventory. However, the quick ratio improved significantly to 0.88 in 2021, before dropping to 0.27 in 2023 and increasing again to 0.38 in 2024. This fluctuation may signal varying levels of efficiency in converting current assets into cash to meet short-term obligations.

Similarly, the cash ratio, which focuses solely on the company's ability to cover short-term liabilities with its cash and cash equivalents, has followed a similar pattern to the quick ratio. Starting at 0.12 in 2020 and rising to 0.88 in 2021, the ratio then decreased to 0.27 in 2023 and climbed back up to 0.38 in 2024. This indicates that while SPX Corp has maintained a level of liquidity over the years, there have been fluctuations in its cash position that could impact its ability to meet immediate financial commitments.

Overall, SPX Corp's liquidity ratios suggest that the company has made some strides in improving its short-term financial health, as evidenced by the increasing current ratio. However, the fluctuations in the quick ratio and cash ratio signal potential challenges in effectively managing cash flow and liquid assets to meet short-term obligations consistently.

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Additional liquidity measure

The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. For SPX Corp, the cash conversion cycle has shown fluctuations over the years, starting at 54.72 days in December 2020 and increasing to 87.95 days by December 2021. This trend continued with further increases to 95.05 days in 2022 and 94.28 days in 2023. However, there was a slight improvement in efficiency as the cycle decreased to 83.51 days by December 2024.

The increasing trend from 2020 to 2023 suggests that SPX Corp may have experienced challenges in managing its inventory, accounts receivables, and payables efficiently, leading to a longer cash conversion cycle. This could indicate potential issues with liquidity and working capital management during those years. The improvement in 2024 is a positive sign, showing potential efforts to streamline operations and enhance cash flow conversion efficiency.

Overall, SPX Corp should continue monitoring and managing its cash conversion cycle closely to ensure optimal working capital management and liquidity position in the future.