AZZ Incorporated (AZZ)

AZZ Incorporated's liquidity ratios have shown a declining trend over the years, indicating potential challenges in meeting short-term obligations.

- The current ratio has decreased from 2.67 in February 2021 to 1.70 in February 2025. This suggests a decrease in the company's ability to cover its current liabilities with current assets, which may raise concerns about its short-term financial health.

- The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also decreased significantly from 0.13 in February 2021 to 0.01 in February 2025. This may indicate a decreasing ability to meet short-term obligations without relying on inventory.

- The cash ratio, the most conservative liquidity measure that considers only cash and cash equivalents, has also shown a declining trend from 0.13 in February 2021 to 0.01 in February 2025. This suggests that the company's ability to cover its current liabilities with its most liquid assets has decreased over time.

Overall, based on these liquidity ratios, AZZ Incorporated may face challenges in fulfilling its short-term financial obligations, and stakeholders may need to closely monitor the company's liquidity position and management of working capital in the future.

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Additional liquidity measure

AZZ Incorporated's cash conversion cycle, which represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales, has shown some fluctuations over the years.

As of February 28, 2021, the cash conversion cycle stood at 52.16 days. This indicates that it took AZZ Incorporated approximately 52 days to convert its investments in inventory into cash after making sales.

By February 28, 2022, the cash conversion cycle increased to 67.94 days, suggesting a delay in converting investments into cash. However, the trend shifted by February 28, 2023, when the cash conversion cycle decreased to 51.11 days, indicating an improvement in efficiency.

The trend continued to show positive signs, with the cash conversion cycle further decreasing to 36.58 days as of February 29, 2024. This significant reduction implied that AZZ Incorporated was able to convert its investments into cash much faster.

As of February 28, 2025, the cash conversion cycle dropped even further to 34.30 days, highlighting the company's enhanced ability to manage its working capital effectively and convert investments into cash promptly.

Overall, the decreasing trend in the cash conversion cycle over the years indicates improved efficiency in managing inventory and collecting receivables, ultimately leading to a quicker conversion of investments into cash for AZZ Incorporated.