BorgWarner Inc (BWA)

The liquidity ratios of BorgWarner Inc have shown some fluctuations over the past five years. The current ratio, which indicates the company's ability to cover short-term obligations with its current assets, has been relatively stable, ranging from 1.56 to 1.76. This suggests that BorgWarner has generally been able to meet its short-term financial obligations comfortably.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown some variability, ranging from 1.16 to 1.35. While the quick ratio has been slightly lower compared to the current ratio, it still indicates BorgWarner's ability to cover its short-term liabilities with its most liquid assets.

The cash ratio, which provides the most conservative measure of liquidity by focusing solely on cash and cash equivalents, has fluctuated between 0.38 and 0.58. This ratio indicates the company's ability to cover its current liabilities with its cash reserves, with a higher ratio indicating a stronger liquidity position.

Overall, BorgWarner Inc's liquidity ratios suggest that the company has maintained a relatively healthy liquidity position over the past five years, with the ability to meet its short-term obligations using its current assets and cash reserves. However, it is important for the company to continue monitoring and managing its liquidity effectively to ensure ongoing financial stability.

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Additional liquidity measure

The cash conversion cycle of BorgWarner Inc has shown fluctuating trends over the past five years. The company's ability to efficiently convert its resources into cash has improved in 2023 compared to the previous year, with the cycle decreasing to 41.23 days. This indicates that BorgWarner Inc was able to manage its cash flow more effectively, potentially through better inventory and accounts receivable management.

In 2022, the cash conversion cycle increased to 48.11 days, which was higher than in 2021. This suggests that the company took longer to convert its investments in inventory and accounts receivable into cash, impacting its liquidity and operating efficiency.

Similarly, in 2020 and 2019, the cash conversion cycle was 57.68 days and 45.52 days, respectively. The longer cycle in 2020 may indicate challenges in managing working capital efficiently, leading to a delay in converting resources into cash. However, the improvement in 2019 suggests that BorgWarner Inc was able to enhance its cash conversion efficiency compared to the previous year.

Overall, BorgWarner Inc should continue to monitor its cash conversion cycle closely to ensure optimal working capital management and operational efficiency. A lower cash conversion cycle indicates better liquidity and financial performance, highlighting the company's ability to generate cash from its operating activities effectively.