Valmont Industries Inc (VMI)

Valmont Industries Inc's liquidity ratios indicate its ability to meet short-term obligations effectively. The current ratio, which measures the company's ability to cover its short-term liabilities with current assets, has remained relatively stable over the years, ranging from 2.07 to 2.47. This suggests that Valmont has a good level of current assets to cover current liabilities, providing a buffer for financial obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Valmont's quick ratio has shown some fluctuations but generally stayed above 1. This indicates that the company has an adequate level of highly liquid assets to cover immediate liabilities without relying on selling inventory.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities using only cash and cash equivalents. Valmont's cash ratio has varied from 0.20 to 0.60, showing that the company may have a lower level of cash relative to current liabilities compared to quick assets.

Overall, Valmont Industries Inc's liquidity ratios suggest that the company has maintained a strong position in meeting short-term obligations over the years, with a comfortable level of current assets to cover current liabilities. However, the fluctuations in certain ratios indicate the need for close monitoring to ensure continued liquidity stability.

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Additional liquidity measure

The cash conversion cycle of Valmont Industries Inc has fluctuated over the past five years. In 2020, the cycle was 89.92 days, increased to 102.69 days in 2021, decreased to 92.53 days in 2022, further decreased to 85.46 days in 2023, and decreased again to 81.05 days in 2024. This indicates that the company has been able to manage its cash conversion cycle more efficiently in recent years, allowing it to convert its investments in inventory and receivables into cash at a quicker pace. A shorter cash conversion cycle is generally a positive indicator of a company's liquidity and operational efficiency. Valmont Industries Inc has shown improvements in managing its working capital over the years, which can enhance its overall financial health and performance.