American Woodmark Corporation (AMWD)

The liquidity ratios of American Woodmark Corporation over the period from April 2021 to April 2025 reveal a generally positive outlook in terms of short-term financial health, with some variability across different measures.

The current ratio, which assesses the ability to cover current liabilities with current assets, shows a consistent upward trend. It increased from 1.86 in April 2021 to a peak of 2.07 in April 2023, indicating an improving liquidity position during this period. The ratio slightly declined to 2.06 in April 2024 and further to 1.99 in April 2025, but it remains well above the standard benchmark of 1.0, signifying that the company maintains a comfortable buffer of current assets over current liabilities.

The quick ratio, which excludes inventories from current assets to provide a more stringent measure of liquidity, demonstrates more fluctuation. It declined from 1.08 in April 2021 to 0.83 in April 2022, reflecting a reduction in liquid assets relative to short-term obligations. Thereafter, it increased modestly to 0.90 in 2023 and further to 1.12 in April 2024, before decreasing again to 0.87 in April 2025. This pattern indicates periods of tightening and loosening in liquid asset adequacy, with the ratio surpassing the key threshold of 1.0 in 2024, suggesting greater liquidity during that period.

The cash ratio, which considers only cash and cash equivalents against current liabilities, has experienced significant fluctuation. It was 0.41 in April 2021, then sharply decreased to 0.10 in April 2022, indicating a reduced level of immediate cash reserves. Subsequently, it recovered to 0.23 in 2023 and expanded further to 0.45 in April 2024, before declining again to 0.26 in April 2025. Despite these variations, the cash ratio remains below 0.5 throughout the period, reflecting that while cash holdings fluctuate, the company typically maintains a modest buffer of cash to meet short-term obligations.

Overall, the company's liquidity profile underscores a trajectory of improvement from 2021 through 2024, with current assets generally exceeding current liabilities by a comfortable margin. However, the fluctuations in quick and cash ratios suggest periodic tightening of liquid assets. The overall trend indicates prudent liquidity management, with the company maintaining sufficient buffers to meet short-term liabilities, though the cash position remains relatively modest and susceptible to fluctuations.

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Additional liquidity measure

The cash conversion cycle (CCC) of American Woodmark Corporation over the specified period exhibits notable fluctuations. As of April 30, 2021, the CCC was approximately 47.79 days, indicating that it took nearly 48 days for the company to convert its investments in inventory and receivables into cash, after accounting for accounts payable. This cycle lengthened to around 57.00 days by April 30, 2022, reflecting a slowdown in the company's ability to quickly convert receivables and inventories into cash, or potentially delays in collection and inventory turnover processes.

Subsequently, by April 30, 2023, the CCC decreased to approximately 48.13 days, signaling an improvement towards more efficient working capital management similar to the levels seen in 2021. This reduction persisted into April 30, 2024, with the CCC slightly increasing to about 49.60 days, suggesting a marginal extension in the cycle period, possibly due to temporary operational or market factors.

Most notably, by April 30, 2025, the CCC declined substantially to approximately 33.21 days, indicating a significant improvement in the company's liquidity management. This reduction implies more rapid conversion of inventory and receivables into cash, alongside effective management of accounts payable. Overall, the trend demonstrates a period of fluctuation followed by a marked improvement, evident from the lower CCC figure in 2025, which could benefit the company's liquidity position if sustained.