Telephone and Data Systems Inc (TDS)

Telephone And Data Systems, Inc.'s liquidity ratios have shown fluctuations over the past five years. The current ratio has shown a downward trend from 2.62 in 2020 to 1.40 in 2023, indicating a decrease in the company's ability to meet its short-term obligations with its current assets. Similarly, the quick ratio has also decreased over the same period, from 2.49 in 2020 to 1.23 in 2023, suggesting a decline in the company's ability to cover its short-term liabilities with its most liquid assets.

The trend in the cash ratio also reflects a decrease in liquidity, dropping from 1.36 in 2020 to 0.32 in 2023. This may indicate that Telephone And Data Systems, Inc. has a lower amount of cash and cash equivalents relative to its current liabilities, which could potentially pose challenges in meeting its immediate payment obligations.

Overall, the decreasing trend in these liquidity ratios suggests that Telephone And Data Systems, Inc. may be experiencing some challenges in maintaining its short-term liquidity position. It is essential for the company to closely monitor its liquidity levels and take appropriate measures to ensure it has sufficient liquidity to meet its financial commitments.

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Additional liquidity measure

The cash conversion cycle measures how efficiently a company manages its working capital by analyzing the time it takes to convert its investments in inventory and other resources into cash flow from sales.

Telephone And Data Systems, Inc.'s cash conversion cycle has shown a fluctuating trend over the past five years. In 2023, the company's cash conversion cycle increased to 52.48 days from 49.75 days in 2022, indicating a longer time period between the company's payments for inventory and the receipt of cash from sales. This may suggest potential inefficiencies in managing working capital during the period.

Comparing the most recent data to earlier years such as 2021 and 2020, where the cash conversion cycle was 46.70 days and 35.85 days respectively, there has been a noticeable increase. The longer cash conversion cycle in 2023 may be attributed to various factors such as changes in the company's sales policies, inventory management practices, or collection processes.

Despite the fluctuation in the cash conversion cycle over the years, it is essential for Telephone And Data Systems, Inc. to monitor and manage this metric effectively. A longer cash conversion cycle can tie up cash flow and impact liquidity, while a shorter cycle can potentially improve cash flow efficiency and overall working capital management. Efficient management of the cash conversion cycle is crucial for ensuring the company's financial health and operational performance.