Armstrong World Industries Inc (AWI)

Armstrong World Industries Inc.'s liquidity ratios provide insights into the company's ability to meet its short-term obligations. The current ratio measures the company's ability to cover short-term liabilities with its current assets. The trend shows fluctuations in the current ratio over the past five years, with a peak in 2022 at 1.95 and a low in 2021 at 1.54. In 2023, the current ratio decreased to 1.61, indicating a slight decline in short-term liquidity compared to the previous year.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity as it excludes inventories from current assets. The trend in the quick ratio shows similar fluctuations, with higher values in 2022 and 2020 compared to 2021 and 2019. In 2023, the quick ratio decreased to 1.04, indicating a lower ability to cover short-term liabilities with quick assets alone.

The cash ratio measures the company's ability to cover short-term liabilities using only cash and cash equivalents. This ratio also shows fluctuations over the past five years, with the highest value in 2020 at 0.87 and the lowest in 2019 at 0.35. In 2023, the cash ratio further decreased to 0.47, signaling a lower proportion of cash to cover short-term obligations.

Overall, Armstrong World Industries Inc. has maintained moderate to good liquidity levels over the years, as indicated by the current, quick, and cash ratios. However, the decreasing trend in these ratios in 2023 suggests a potential decrease in short-term liquidity compared to previous years. It is essential for the company to closely monitor its liquidity position and manage its current assets efficiently to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

Armstrong World Industries Inc.'s cash conversion cycle has shown some fluctuations over the past five years. The trend indicates that the company has been relatively successful in managing its working capital efficiency during this period.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower cash conversion cycle is generally considered favorable as it signifies that the company is able to convert its inventory and receivables into cash quickly.

Looking at Armstrong World Industries Inc.'s data, the company's cash conversion cycle ranged from 79.06 days to 85.02 days over the five-year period. Despite some fluctuations, the company has managed to keep its cash conversion cycle relatively stable, with only a few days' difference between the highest and lowest figures.

Overall, Armstrong World Industries Inc. has maintained a moderate level of efficiency in managing its working capital over the years, as indicated by the consistency in its cash conversion cycle figures. Further analysis and comparison with industry benchmarks could provide additional insights into the company's operational efficiency and liquidity management.