BorgWarner Inc (BWA)

The liquidity ratios of BorgWarner Inc show stability and an ability to meet short-term obligations. The current ratio has slightly increased from 1.62 in 2020 to 1.79 in 2024, indicating the company's ability to cover its current liabilities with its current assets. The quick ratio, although fluctuating, generally remained above 1, indicating the company's ability to cover its short-term obligations without relying on inventory. The cash ratio, while fluctuating, remained above 0.3, suggesting that BorgWarner Inc holds an adequate level of cash to cover its immediate liabilities. Overall, the liquidity ratios of BorgWarner Inc reflect a healthy financial position and the ability to meet its short-term financial commitments.

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Additional liquidity measure

The cash conversion cycle of BorgWarner Inc fluctuated over the years, indicating changes in its efficiency in managing cash flow related to its operating cycle. In December 31, 2020, the cash conversion cycle was 161.68 days, suggesting a longer time to convert investments in inventory into cash receipts. By December 31, 2021, the cycle improved significantly to 48.69 days, reflecting a more efficient management of working capital. This trend continued in December 31, 2022, with a further decrease to 29.22 days, indicating faster conversion of inventory into sales, and ultimately cash.

However, a reversal occurred by December 31, 2023, with the cycle increasing to 121.13 days, possibly due to changes in inventory management or sales collection processes. In the most recent data point of December 31, 2024, the cycle remained elevated at 113.59 days, indicating a potential need for BorgWarner Inc to focus on optimizing its cash conversion efficiency to enhance cash flow and overall financial performance.