American Woodmark Corporation (AMWD)

American Woodmark Corporation's liquidity ratios have shown varying trends over the past five years.

The current ratio, which measures the company's ability to meet short-term obligations with short-term assets, has generally been within the range of 1.86 to 2.07, indicating that the company has had a strong liquidity position to cover its current liabilities.

In contrast, the quick ratio, which indicates the company's ability to meet short-term obligations without relying on inventory, shows more volatility, ranging from 0.83 to 1.24. This suggests that the company may have had fluctuations in its ability to quickly cover its immediate liabilities with its most liquid assets.

The cash ratio, which specifically measures the company's ability to cover its current liabilities with cash and cash equivalents, has also demonstrated variability, ranging from 0.10 to 0.45. The higher ratios in recent years indicate an improvement in the company's ability to meet short-term obligations solely with its available cash resources.

Overall, American Woodmark Corporation appears to have maintained a relatively solid liquidity position over the years, with the current ratio consistently above 1.5 (indicating a healthy level of liquidity) and the company showing improvements in its quick and cash ratios, which reflect a strengthened ability to meet short-term obligations with liquid assets and cash reserves.

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Additional liquidity measure

The cash conversion cycle of American Woodmark Corporation has exhibited fluctuations over the past five years. In the most recent fiscal year ending April 30, 2024, the company's cash conversion cycle was 46.73 days, showing a slight improvement compared to the prior year. This indicates that the company took approximately 46.73 days to convert its investments in inventory and accounts receivable into cash during the fiscal year.

Looking further back, in fiscal year 2023, the cash conversion cycle was slightly higher at 48.13 days, whereas it was 57.00 days in 2022. The company experienced a decrease in its cash conversion cycle in fiscal year 2021 compared to 2022, with a cycle of 47.82 days. The most efficient performance in terms of cash conversion cycle was observed in fiscal year 2019, with a cycle of 41.43 days.

Overall, while the company has seen fluctuations in its cash conversion cycle over the years, it is essential for management to continue monitoring and managing this metric effectively to optimize working capital efficiency and enhance cash flow management.