Stanley Black & Decker Inc (SWK)

From the data provided, Stanley Black & Decker Inc's liquidity ratios have fluctuated over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has shown some variability. In 2023, the current ratio stands at 1.19, slightly lower than the previous year's 1.21. The ratio was lowest in 2021 at 0.97 and highest in 2020 at 1.32, indicating some level of inconsistency in the company's short-term liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity as it excludes inventory from current assets. Stanley Black & Decker Inc's quick ratio has been relatively low over the past five years, with the lowest being 0.20 in 2021 and the highest at 0.67 in 2020. In 2023, the quick ratio improved to 0.34 compared to the previous year's 0.26, but it still remains at a level that may raise concerns about its ability to meet immediate obligations without relying on inventory sales.

The cash ratio, which is the most conservative of the three liquidity ratios as it only considers cash and cash equivalents, shows a similar trend of fluctuation. Stanley Black & Decker Inc's cash ratio was lowest in 2021 at 0.02 and highest in 2020 at 0.30. In 2023, the cash ratio improved to 0.08 compared to the previous year's 0.06, but it still remains relatively low, suggesting that the company may have limited cash on hand to cover its short-term liabilities.

Overall, Stanley Black & Decker Inc's liquidity position, as depicted by these ratios, has shown some variability over the past five years, with the company facing challenges in maintaining strong liquidity levels. It would be advisable for stakeholders to closely monitor these ratios to assess the company's ability to meet its short-term obligations and manage its cash flow effectively.

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Additional liquidity measure

The cash conversion cycle of Stanley Black & Decker Inc has fluctuated over the past five years, indicating variations in the company's efficiency in managing its working capital.

In 2023, the cash conversion cycle was 90.32 days, showing an improvement from the previous year's 129.93 days. This reduction indicates that the company was able to convert its investments in inventory and receivables into cash more efficiently during 2023.

Comparing the latest figure to 2019 (52.21 days), however, the cash conversion cycle has increased significantly, suggesting a lengthening of the company's operating cycle. This could be attributed to factors such as changes in inventory management or payment terms with customers and suppliers.

Overall, the trend in the cash conversion cycle of Stanley Black & Decker Inc indicates the need for continuous monitoring and potential adjustments in working capital management practices to optimize cash flow and operational efficiency.