Tempur Sealy International Inc (TPX)

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 1.21 1.18 1.25 1.24 1.22 1.18 1.23 1.11 1.21 1.28 1.08 1.36 0.99 1.12 0.94 1.39 1.16 1.13 1.21 1.18
Quick ratio 0.58 0.58 0.57 0.54 0.50 0.54 0.56 0.49 0.68 0.87 0.61 0.77 0.46 0.65 0.49 0.76 0.56 0.57 0.57 0.55
Cash ratio 0.08 0.09 0.10 0.09 0.07 0.09 0.10 0.11 0.29 0.43 0.07 0.32 0.07 0.22 0.15 0.26 0.08 0.06 0.05 0.05

Tempur Sealy International Inc's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, shows a generally stable trend over the past eight quarters, ranging from 1.11 to 1.25. While the ratios are above 1, indicating that the company has more current assets than current liabilities, the fluctuations suggest that Tempur Sealy International Inc may have experienced varying levels of liquidity over this period.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventories from current assets. Tempur Sealy International Inc's quick ratio has shown some fluctuation, ranging from 0.58 to 0.72 over the past eight quarters. The ratios indicate that the company may have had challenges in meeting its short-term obligations using only its most liquid assets.

The cash ratio, which is the most conservative measure of liquidity, focuses solely on a company's cash and cash equivalents to cover its current liabilities. Tempur Sealy International Inc's cash ratio has varied between 0.18 and 0.25 over the past eight quarters, suggesting that the company has maintained a relatively stable level of cash reserves compared to its short-term obligations.

Overall, while Tempur Sealy International Inc has generally maintained ratios above 1 for the current ratio, the lower quick ratios and cash ratios indicate that the company may need to further evaluate its liquidity management strategies to ensure it can meet its short-term financial commitments effectively.

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 56.23 54.76 56.27 59.77 56.16 54.78 56.95 45.32 35.25 29.17 34.94 44.01 35.94 35.74 41.59 43.65 45.54 52.89 51.70 45.67

The cash conversion cycle of Tempur Sealy International Inc has shown relatively stable performance over the past eight quarters, ranging from a low of 45.32 days in Q1 2022 to a high of 59.77 days in Q1 2023. The cycle represents the time it takes for the company to convert its investments in inventory and accounts receivable into cash flows from sales.

During Q4 2022 and Q3 2023, the company managed to keep the cash conversion cycle around the mid-50s range, indicating efficient management of working capital. However, in Q1 2023, the cycle increased significantly to 59.77 days, suggesting potential issues with inventory management or collection of accounts receivable.

Overall, the trend in the cash conversion cycle fluctuates within a relatively narrow band, but the sharp increase in Q1 2023 warrants further investigation to identify the root causes behind the delay in converting investments into cash, which may impact the company's liquidity and operational efficiency.