Tyson Foods Inc (TSN)

The liquidity ratios of Tyson Foods Inc have shown fluctuating trends over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with current assets, improved steadily from 1.55 in 2021 to 2.04 in 2024, indicating stronger liquidity and a better ability to meet short-term liabilities.

On the other hand, the quick ratio, also known as the acid-test ratio, improved from 0.47 in 2023 to 0.86 in 2024. This ratio excludes inventory from current assets, providing a more conservative measure of liquidity. The increasing trend in the quick ratio suggests that Tyson Foods has been more capable of meeting its short-term obligations with its most liquid assets.

The cash ratio, which is the most stringent measure of liquidity as it considers only cash and cash equivalents to cover current liabilities, fluctuated over the years. It increased from 0.34 in 2020 to 0.38 in 2021 before declining to 0.36 in 2024. Despite the decline in the cash ratio in the most recent year, Tyson Foods still maintains a relatively strong ability to cover short-term liabilities with cash alone.

Overall, the improving current and quick ratios indicate that Tyson Foods Inc has strengthened its liquidity position over the years, while the cash ratio remains at a level that suggests the company has sufficient cash reserves to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Tyson Foods Inc has demonstrated slight fluctuations over the past five years. In the most recent fiscal year ending on September 30, 2024, the company's cash conversion cycle was 36.99 days, indicating the number of days it takes for the company to convert its investments in raw materials and production into cash received from sales. Compared to the previous year, there was a marginal increase of 0.04 days in the cash conversion cycle.

Looking back over the five-year period, the company experienced a peak cash conversion cycle of 41.39 days in fiscal year 2022, followed by improvements in the subsequent years. This trend suggests that the company has been managing its working capital efficiency more effectively, leading to a shorter time period required to convert inventory investments into cash.

Overall, Tyson Foods Inc has maintained a relatively stable cash conversion cycle, with minor fluctuations year over year. The company's ability to effectively manage its working capital and optimize its cash conversion cycle is crucial for ensuring operational efficiency and liquidity in its business operations.