Smith AO Corporation (AOS)

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	1.59	1.68	1.81	1.84	1.75	1.74	1.76	1.72	1.57	1.77	1.75	1.86	1.83	1.77	1.96	2.06	1.96	2.06	2.19	2.25
Quick ratio	1.01	1.04	1.16	1.21	1.14	1.09	1.16	1.19	1.13	1.33	1.31	1.44	1.44	1.34	1.47	1.54	1.49	1.54	1.66	1.75
Cash ratio	0.38	0.38	0.48	0.55	0.52	0.46	0.49	0.58	0.56	0.70	0.64	0.80	0.78	0.63	0.77	0.79	0.72	0.70	0.79	0.86

A.O. Smith Corp.'s liquidity ratios have shown some fluctuation over the past eight quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally remained above 1, indicating a strong liquidity position. However, there has been a slight decrease in the current ratio from Q2 2023 to Q4 2023.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also exhibited a similar trend of staying above 1 over the period. This indicates that the company has a sufficient level of liquid assets to meet its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, shows a declining trend from Q1 2023 to Q4 2023. This suggests that A.O. Smith Corp.'s ability to cover its current liabilities solely with cash and equivalents has weakened slightly.

Overall, A.O. Smith Corp. appears to have maintained a healthy liquidity position, as evidenced by its current ratio consistently above 1 and its quick ratio also comfortably above 1. However, the decreasing trend in the cash ratio warrants further monitoring to ensure the company's ability to meet its short-term obligations in cash remains robust.

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	44.62	51.55	53.35	51.89	43.81	46.05	43.95	39.37	28.51	29.50	30.38	30.91	30.29	42.28	48.35	47.45	42.45	49.05	52.05	52.64

The cash conversion cycle for A.O. Smith Corp. has shown some fluctuations over the past eight quarters. In Q1 2022, the company had the shortest cash conversion cycle of 33.21 days, indicating efficient management of cash flow from operations, inventory, and accounts receivable. However, this cycle increased in subsequent quarters, reaching a peak of 51.77 days in Q2 2023. This suggests a potential delay in converting sales into cash during that period.

Overall, A.O. Smith Corp. has experienced some variability in its cash conversion cycle, which may indicate fluctuations in working capital management and operational efficiency. Further analysis of the company's financial performance and operational factors would be required to provide a more in-depth understanding of the reasons behind these fluctuations and potential areas for improvement.