Sterling Construction Company Inc (STRL)

The liquidity ratios of Sterling Construction Company Inc. over the analyzed period demonstrate a generally stable position with some fluctuations. The current ratio, which measures the company's ability to satisfy short-term obligations with its current assets, fluctuated between a low of approximately 1.10 in March 2021 and a high of 1.38 at the end of 2024. For most periods, the current ratio remained above 1.20, indicating that the company maintained a consistent level of current assets in relation to current liabilities, suggesting a prudent liquidity position.

The quick ratio, which excludes inventory from current assets to assess more liquid assets, followed a similar trend, ranging from a low of about 1.05 in March 2021 to a high of approximately 1.35 at the end of 2024. This ratio consistently stayed above 1.10, showcasing the company's capacity to cover immediate liabilities without relying on inventory sales, which typically indicates a sound liquidity buffer.

The cash ratio, providing the most conservative measure of liquidity by focusing solely on cash and cash equivalents, was relatively low throughout the period but experienced an upward trend starting around March 2021. It ranged from roughly 0.19 in early 2021 to a high of around 0.90 at the end of 2024. The increasing cash ratio suggests improving cash reserves, enhancing the company's ability to meet its short-term obligations purely through its cash holdings.

Overall, the data reflect a company with stable liquidity ratios, maintaining sufficient current and liquid assets to meet its short-term liabilities. The slight upward trend in cash holdings indicates potential strengthening of immediate liquidity, although the ratios remain comfortably above levels that would typically signal liquidity concerns. This pattern suggests effective liquidity management over the analyzed period, supporting the company's operational stability and financial health.

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Additional liquidity measure

The cash conversion cycle (CCC) of Sterling Construction Company Inc. has experienced fluctuations over the analyzed period from June 30, 2020, to March 31, 2025. Initially, in June 2020, the CCC stood at approximately 50.64 days, indicating that, on average, the company took about this duration to convert its investments in inventory and receivables into cash, accounting for its payables.

Throughout 2020 and into 2021, there was a noticeable downward trend in the CCC, decreasing to a low of around 36.53 days by March 2022. This reduction suggests that the company improved its operational efficiency, either by shortening the receivables collection period, reducing inventory holding times, or extending payment terms with suppliers.

Between March 2022 and September 2022, the CCC increased again to approximately 53.48 days, marking a reversal in the trend and indicating potential challenges in cash conversion efficiency during that period. Subsequently, the CCC showed some recovery, decreasing again to about 33.76 days by the end of 2023. This significant reduction near the end of 2023 suggests more effective management of inventory, receivables, or both, leading to faster cash realization.

However, during the first half of 2024, the CCC increased again to roughly 45.39 days by June 2024, before experiencing some fluctuations, including a reduction to 37.89 days in September 2024 and further down to 30.53 days by December 2024. The most recent data for March 2025 shows a notable decline to 21.22 days, indicating a substantial improvement in the company's cash conversion processes.

Overall, the company's cash conversion cycle has demonstrated variability but generally exhibits a trend toward shorter cycles in the later stages of the period. These reductions in the CCC imply enhanced operational efficiency, better receivables management, improved inventory turnover, or more advantageous payment terms with suppliers. Conversely, periods of rising CCC suggest temporary inefficiencies or strategic changes impacting cash flow timing.