Valvoline Inc (VVV)
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 | 2.24 | 2.59 | 2.68 | 3.95 | 1.84 | 1.76 | 1.64 | 1.74 | 1.85 | 1.82 | 2.00 | 2.16 | 2.40 | 3.24 | 3.19 | 3.45 | 1.89 | 1.88 | 1.94 | 1.88 |
| Quick ratio | 1.97 | 2.31 | 2.52 | 3.86 | 0.09 | 0.10 | 1.06 | 1.16 | 1.26 | 0.52 | 1.41 | 1.55 | 1.89 | 2.69 | 2.66 | 2.81 | 1.32 | 1.32 | 1.33 | 1.24 |
| Cash ratio | 1.70 | 2.09 | 2.34 | 3.76 | 0.03 | 0.03 | 0.15 | 0.20 | 0.28 | 0.40 | 0.45 | 0.55 | 1.04 | 1.71 | 1.74 | 1.93 | 0.38 | 0.38 | 0.31 | 0.29 |
The liquidity ratios of Valvoline Inc, specifically the current ratio, quick ratio, and cash ratio, provide insights into the company's short-term financial health and ability to meet its immediate obligations.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown some fluctuations over the past quarters. The ratio decreased from Q2 2023 to Q1 2023 but then increased steadily until Q3 2023. However, in Q4 2023 and Q1 2024, the current ratio declined. Overall, the current ratio has remained above 1, indicating that Valvoline Inc has more than enough current assets to cover its current liabilities.
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has exhibited fluctuations over the quarters. It decreased sharply in Q1 2024 compared to the previous quarters but remained above 1 in all periods, indicating a sufficient ability to meet short-term obligations without relying on inventory.
The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has also fluctuated over the quarters. While there has been a general upward trend in the cash ratio from Q2 2022 to Q2 2023, the ratio dropped significantly in Q3 2023 and Q4 2023 before increasing in Q1 2024. Despite the fluctuations, the cash ratio has generally been low, suggesting that Valvoline Inc holds limited cash relative to its short-term obligations.
Overall, based on the liquidity ratios, Valvoline Inc appears to have a solid ability to meet its short-term obligations, as indicated by current and quick ratios consistently above 1. However, the low cash ratio indicates a lower level of liquidity in terms of cash on hand, which may require monitoring to ensure the company's ability to cover immediate liabilities.
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 | 6.69 | -6.08 | 18.90 | -169.28 | -1.33 | 2.61 | 76.02 | 77.46 | 79.45 | 8.07 | 70.45 | 74.05 | 79.78 | 69.81 | 65.05 | 58.85 | 69.39 | 67.13 | 72.72 | 65.88 |
The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. In the case of Valvoline Inc, the cash conversion cycle has fluctuated over the past eight quarters, with values ranging from 0.00 days to as high as 131.65 days.
In Q1 2024, Valvoline Inc had a cash conversion cycle of 32.98 days, indicating that the company takes approximately a month to convert its investments in inventory into cash from sales. This represents a slight improvement from the previous quarter where the cycle was 34.08 days.
In Q3 2023, the company had a cash conversion cycle of 0.00 days, which suggests that Valvoline was able to convert its investments into cash almost instantaneously during that period. However, this exceptionally low value may be due to specific circumstances or accounting anomalies.
On the other hand, in Q2 2023, the cash conversion cycle was significantly higher at 131.65 days, indicating that Valvoline took over four months to convert its investments into cash from sales. This suggests potential inefficiencies in inventory management or collection processes during that period.
Overall, Valvoline Inc's cash conversion cycle has shown variability over the past eight quarters, with periods of efficiency and inefficiency in converting investments into cash flows. It is important for the company to closely monitor and manage its cash conversion cycle to optimize working capital and improve overall financial performance.