Molson Coors Brewing Co Class B (TAP)

Molson Coors Beverage Company's liquidity ratios, including the current ratio, quick ratio, and cash ratio, indicate the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown fluctuations over the past five years. It decreased from 0.59 in 2019 to 0.70 in 2023. A current ratio below 1 may suggest potential liquidity issues, although Molson Coors Beverage Company's current ratio has generally stayed close to this threshold.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has also shown a mixed trend at Molson Coors Beverage Company. It increased from 0.42 in 2019 to 0.50 in 2023. A quick ratio below 1 indicates that the company may struggle to meet its short-term obligations without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with its available cash and cash equivalents. Molson Coors Beverage Company's cash ratio has generally improved over the years, from 0.20 in 2019 to 0.29 in 2023. A higher cash ratio indicates a stronger ability to pay off short-term obligations without relying on other current assets.

Overall, Molson Coors Beverage Company's liquidity ratios suggest that the company has shown some improvement in its short-term liquidity position, as evidenced by the increasing quick and cash ratios. However, the current ratio remaining below 1 may indicate a continued need for the company to closely monitor and manage its short-term liquidity risk.

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Additional liquidity measure

The cash conversion cycle of Molson Coors Beverage Company has exhibited a fluctuating trend over the past five years, indicating varying efficiency in managing its cash flows and working capital. The cycle has been negative, implying that the company is able to convert its investment in inventory back into cash relatively quickly.

In 2023, the cash conversion cycle decreased to -39.64 days compared to -36.52 days in 2022, showing a slight improvement in the efficiency of the company's cash conversion process. However, this cycle remains negative, meaning that Molson Coors is operating with a net inflow of cash throughout its operating cycle, which can be advantageous in terms of liquidity.

Despite the fluctuations, the company has generally maintained a negative cash conversion cycle over the years, suggesting effective management of inventory, accounts receivable, and accounts payable to optimize cash flow. This efficient cycle indicates that Molson Coors is successfully balancing its working capital components to minimize the time it takes to generate cash from its operational activities.

Overall, the cash conversion cycle analysis reflects Molson Coors Beverage Company's ability to effectively manage its working capital and liquidity position, demonstrating a consistent focus on streamlining its cash conversion process to support sustainable business operations.