Veralto Corporation (VLTO)

Based on the liquidity ratios of Veralto Corporation, we can see the following trends:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Veralto Corporation's current ratio was 1.96 as of June 30, 2024, indicating that it had $1.96 in current assets for every $1 in current liabilities.
- The current ratio improved to 2.13 as of September 30, 2024, suggesting a stronger liquidity position.
- However, by December 31, 2024, the current ratio declined slightly to 1.92, which may raise concerns about the company's ability to meet its short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Veralto Corporation's quick ratio was 1.55 as of June 30, 2024, showing its ability to cover immediate liabilities without relying on inventory.
- The quick ratio improved to 1.72 by September 30, 2024, indicating a stronger ability to meet short-term obligations.
- As of December 31, 2024, the quick ratio was 1.67, which remained relatively stable compared to the previous quarter.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity measure, focusing solely on cash and cash equivalents to cover current liabilities. Veralto Corporation's cash ratio was 0.88 as of both June 30, 2024, and December 31, 2024, indicating that it had $0.88 in cash and cash equivalents for every $1 in current liabilities.
- The cash ratio improved to 1.03 by September 30, 2024, signaling an increased ability to meet short-term obligations with cash on hand.

Overall, Veralto Corporation's liquidity ratios show a mix of strengths and areas for improvement. While the current and quick ratios demonstrate adequate liquidity levels, the slight decline in the current ratio by the end of 2024 may require closer monitoring to ensure the company can meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Veralto Corporation indicates the efficiency with which the company manages its working capital. Over the three quarters provided, the trend indicates a slight increase in the cash conversion cycle, starting at 50.98 days on June 30, 2024, and rising to 51.61 days by September 30, 2024, before reaching its peak at 59.44 days on December 31, 2024.

A longer cash conversion cycle suggests that Veralto is taking more time to convert its investments in inventory back into cash. This may be a result of slower inventory turnover or longer accounts receivable collection periods. While a longer cycle is not always negative, as it can indicate strategic inventory management or accommodating credit terms for customers, it is essential for the company to continuously monitor and optimize this metric to ensure efficient working capital utilization and liquidity management.