Armstrong World Industries Inc (AWI)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.40 | 1.64 | 1.79 | 1.61 | 1.88 | 2.05 | 2.18 | 1.95 | 1.66 | 1.66 | 1.65 | 1.54 | 1.60 | 1.79 | 2.02 | 1.81 | 2.44 | 2.04 | 2.03 | 1.57 |
| Quick ratio | 0.86 | 0.94 | 1.06 | 0.93 | 1.15 | 1.24 | 1.31 | 1.20 | 0.97 | 1.01 | 0.99 | 0.99 | 1.01 | 1.19 | 1.36 | 1.25 | 1.73 | 1.43 | 1.44 | 0.84 |
| Cash ratio | 0.32 | 0.34 | 0.38 | 0.36 | 0.52 | 0.57 | 0.58 | 0.58 | 0.41 | 0.38 | 0.39 | 0.47 | 0.49 | 0.67 | 0.78 | 0.79 | 1.05 | 0.75 | 0.87 | 0.29 |
Armstrong World Industries Inc's liquidity ratios exhibit fluctuations over the periods analyzed. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, saw an upward trend from December 31, 2019, to March 31, 2023, peaking at 2.18, indicating improved liquidity during this period. However, the ratio declined subsequently, dropping to 1.40 by December 31, 2024.
The quick ratio, a more stringent liquidity measure as it excludes inventory from current assets, displayed a similar trend as the current ratio, reaching its peak of 1.44 on March 31, 2020, before decreasing to 0.86 by December 31, 2024.
Lastly, the cash ratio, which assesses the company's ability to cover its liabilities using only cash and cash equivalents, hovered around 0.5 for most of the analyzed periods, with the highest value of 1.05 on September 30, 2020, and the lowest of 0.32 by December 31, 2024.
Overall, Armstrong World Industries Inc maintained moderate liquidity levels during the period under review, with some fluctuations in the ratios indicating changing short-term solvency positions. Monitoring these ratios can provide valuable insights into the company's ability to meet its near-term financial obligations.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 26.56 | 29.36 | 34.37 | 29.01 | 30.27 | 31.05 | 34.94 | 28.90 | 32.47 | 34.35 | 33.43 | 26.52 | 28.50 | 27.33 | 32.65 | 25.82 | 33.37 | 40.36 | 31.67 | 23.16 |
The cash conversion cycle of Armstrong World Industries Inc fluctuated over the period from December 2019 to December 2024, indicating variations in the company's efficiency in managing its working capital.
The cash conversion cycle is a measure of the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cycle indicates better efficiency in managing working capital.
From December 2019 to December 2024, the cash conversion cycle ranged from a low of 23.16 days to a high of 40.36 days. Initially, the cycle increased, reaching a peak in June 2020, which could potentially signal delays in collecting receivables or managing inventory effectively.
Subsequently, there were fluctuations in the cycle, but overall, a decreasing trend was observed from June 2020 to December 2024. This trend suggests improvements in managing working capital over time, such as more efficient inventory turnover and quicker collection of receivables.
In conclusion, the analysis of Armstrong World Industries Inc's cash conversion cycle highlights the importance of optimizing working capital management to enhance operational efficiency and cash flow generation. The decreasing trend in the cycle indicates potential improvements in the company's working capital management practices over the analyzed period.