Simpson Manufacturing Company Inc (SSD)
Liquidity ratios
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 3.63 | 3.46 | 3.46 | 3.70 | 3.38 | 3.56 | 3.33 | 5.83 | 4.08 | 3.87 | 3.88 | 3.64 | 3.88 | 4.29 | 4.32 | 4.62 | 4.03 | 3.83 | 3.90 | 3.82 |
| Quick ratio | 1.98 | 2.16 | 2.01 | 1.79 | 2.50 | 1.86 | 1.72 | 4.25 | 3.41 | 2.16 | 2.39 | 2.16 | 2.28 | 2.83 | 2.84 | 2.89 | 2.33 | 2.26 | 2.12 | 1.90 |
| Cash ratio | 1.19 | 1.34 | 1.03 | 0.76 | 1.73 | 0.89 | 0.68 | 3.21 | 2.46 | 1.20 | 1.32 | 1.15 | 1.43 | 1.64 | 1.63 | 1.85 | 1.45 | 1.17 | 0.90 | 0.75 |
Simpson Manufacturing Co., Inc.'s liquidity ratios provide insights into the company's ability to meet short-term obligations using its current assets. The current ratio, which measures current assets against current liabilities, has shown a general positive trend over the quarters, ranging from 3.33 to 3.70. This indicates a strong ability to cover short-term liabilities with current assets, with Q1 2023 being the highest at 3.70.
The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, has also exhibited a mostly increasing trend, varying between 1.79 and 2.28. This indicates that the company has a good ability to meet its short-term obligations without relying heavily on inventory, with Q3 2023 showing the highest quick ratio of 2.28.
In terms of the cash ratio, which is the most conservative measure of liquidity as it considers only cash and cash equivalents, the company has shown fluctuations from 0.80 to 1.46. Although the cash ratio has been volatile, it generally reflects the company's ability to cover its short-term liabilities with cash on hand, with Q3 2023 having the highest cash ratio of 1.46.
Overall, Simpson Manufacturing Co., Inc. has maintained solid liquidity positions over the quarters, with increasing trends in the current and quick ratios, indicating improved short-term financial health and ability to meet its obligations. However, the fluctuations in the cash ratio suggest some variability in the company's cash position, which may warrant further monitoring for stability and consistency.
Additional liquidity measure
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 144.32 | 150.16 | 160.98 | 164.81 | 152.02 | 165.76 | 185.02 | 176.78 | 176.26 | 167.99 | 149.92 | 145.16 | 136.03 | 150.29 | 157.18 | 136.25 | 131.40 | 138.83 | 155.97 | 154.39 |
The cash conversion cycle of Simpson Manufacturing Co., Inc. has demonstrated fluctuation over the past eight quarters. The company's cash conversion cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.
In Q4 2023, the cash conversion cycle was 185.34 days, showing a slight improvement compared to Q3 2023 (186.92 days). Despite the variability observed in the cycle over the quarters, it is noteworthy that the company has been able to maintain a cycle below 200 days in recent quarters.
Analyzing the trend over the given period, the company has shown some level of efficiency in managing its working capital. However, the cash conversion cycle increased notably in Q2 2022 (226.30 days), and Q1 2022 (218.63 days), which may indicate some challenges in converting inventory into cash during those periods. It is crucial for Simpson Manufacturing Co., Inc. to continue monitoring and managing its cash conversion cycle effectively to ensure optimal utilization of its resources.
Overall, while there have been fluctuations in the cash conversion cycle, maintaining a cycle below 200 days in recent quarters suggests that the company has been relatively efficient in managing its working capital and converting inventory into sales revenue. It is essential for the company to focus on improving its inventory turnover and collection period to further enhance its cash conversion efficiency in the future.