American Axle & Manufacturing (AXL)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.63 | 1.67 | 1.66 | 1.78 | 1.92 |
| Quick ratio | 0.47 | 0.43 | 0.43 | 0.51 | 0.57 |
| Cash ratio | 0.47 | 0.43 | 0.43 | 0.51 | 0.57 |
American Axle & Manufacturing's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has decreased slightly from 1.92 in 2020 to 1.63 in 2024. This indicates a slight decline in the company's short-term liquidity position.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also decreased from 0.57 in 2020 to 0.47 in 2024. This suggests that the company may be less able to meet its immediate obligations without relying on inventory.
The cash ratio, which represents the proportion of current liabilities that can be covered by cash and cash equivalents, has followed a similar downward trend, from 0.57 in 2020 to 0.47 in 2024. This indicates a decrease in the company's ability to pay off its short-term obligations with its readily available cash.
Overall, the declining trend in American Axle & Manufacturing's liquidity ratios over the five-year period suggests a potential weakening of the company's short-term financial position. It may be important for stakeholders to monitor these ratios closely to ensure that the company remains capable of meeting its financial obligations in the near term.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 30.00 | 32.31 | 33.22 | 33.78 | 28.58 |
The cash conversion cycle of American Axle & Manufacturing has shown a fluctuating trend over the past five years.
Starting from 28.58 days on December 31, 2020, the cash conversion cycle increased to 33.78 days by the end of 2021, signaling a longer period for the company to convert its investments in inventory back to cash.
However, in the subsequent years, there was a slight improvement as the cash conversion cycle decreased to 33.22 days by December 31, 2022, further declining to 32.31 days by December 31, 2023.
By the end of 2024, the company managed to bring the cash conversion cycle down to 30.00 days, indicating a more efficient management of cash flows, inventories, and receivables.
Overall, the trend suggests that American Axle & Manufacturing has been working on optimizing its working capital management to reduce the time it takes to convert its investments into cash, which is a positive sign for the company's liquidity and operational efficiency.