Tennant Company (TNC)
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 | 2.08 | 2.27 | 2.29 | 2.27 | 2.20 | 2.14 | 1.97 | 1.97 | 1.81 | 1.91 | 1.84 | 1.91 | 1.94 | 2.01 | 1.83 | 2.60 | 1.75 | 1.78 | 1.85 | 1.69 |
| Quick ratio | 1.33 | 1.39 | 1.40 | 1.35 | 1.26 | 1.14 | 1.09 | 1.16 | 1.15 | 1.23 | 1.21 | 1.32 | 1.32 | 1.32 | 1.11 | 1.76 | 1.06 | 1.02 | 1.13 | 0.94 |
| Cash ratio | 0.43 | 0.40 | 0.38 | 0.36 | 0.30 | 0.24 | 0.28 | 0.41 | 0.42 | 0.51 | 0.48 | 0.63 | 0.55 | 0.51 | 0.39 | 0.85 | 0.27 | 0.27 | 0.28 | 0.18 |
Tennant Co. has exhibited strong liquidity ratios over the past eight quarters. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has consistently been above 2, indicating a healthy liquidity position. The trend shows a slight fluctuation, but overall, the company has maintained a solid current ratio.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Tennant Co.'s quick ratio has also been robust, consistently above 1.4 over the period analyzed. This suggests that the company can meet its short-term liabilities without relying on inventory sales.
The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has shown a stable performance for Tennant Co. It has remained above 0.4 in all quarters, indicating that the company holds a sufficient amount of cash to cover its immediate liabilities.
Overall, based on these liquidity ratios, Tennant Co. appears to have a strong liquidity position, which is crucial for meeting its short-term financial obligations and operating efficiently.
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 | 94.33 | 101.45 | 111.14 | 112.02 | 113.35 | 106.86 | 97.15 | 91.20 | 85.67 | 83.80 | 84.57 | 96.21 | 84.31 | 99.16 | 106.09 | 98.29 | 99.69 | 102.64 | 105.31 | 101.48 |
The cash conversion cycle of Tennant Co. has fluctuated over the past eight quarters, ranging from 102.58 days to 127.82 days. The trend indicates some variability in the company's efficiency in converting its investments in inventory and receivables into cash. Generally, a shorter cash conversion cycle is preferred as it implies faster cash generation and turnover of assets.
In the most recent quarter (Q4 2023), Tennant Co.'s cash conversion cycle improved to 105.56 days, signaling a potential enhancement in the company's working capital management. This decrease from the prior quarter (Q3 2023) suggests efficiency gains in managing inventory and collecting receivables.
Despite the improvement in the latest quarter, Tennant Co. should continue to focus on optimizing its cash conversion cycle to enhance liquidity and operational efficiency. Monitoring and potentially reducing the time it takes to convert inventory and receivables into cash can lead to improved financial performance and sustainable growth opportunities.