BorgWarner Inc (BWA)
Liquidity ratios
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.65 | 1.65 | 1.62 | 1.59 | 1.56 | 1.72 | 1.77 | 1.72 | 1.74 | 1.78 | 1.69 | 1.68 | 1.62 | 2.35 | 2.36 | 1.76 | 1.65 | 1.58 | 1.66 | 1.62 |
| Quick ratio | 1.25 | 1.20 | 1.11 | 1.09 | 0.92 | 1.21 | 1.24 | 1.21 | 1.25 | 1.35 | 1.34 | 1.39 | 1.41 | 2.00 | 1.80 | 1.24 | 1.18 | 1.15 | 1.20 | 1.11 |
| Cash ratio | 0.42 | 0.27 | 0.20 | 0.23 | 0.34 | 0.33 | 0.38 | 0.39 | 0.48 | 0.56 | 0.54 | 0.59 | 0.65 | 1.10 | 1.02 | 0.42 | 0.36 | 0.36 | 0.31 | 0.21 |
BorgWarner Inc's liquidity ratios have shown variability over the past eight quarters. The current ratio, which measures the company's ability to cover short-term obligations with current assets, has ranged from 1.59 to 1.77. A current ratio above 1 indicates a healthy liquidity position, and BorgWarner's current ratio has generally remained above this threshold, showing that the company has had sufficient current assets to meet its short-term liabilities.
The quick ratio, a more stringent measure of liquidity than the current ratio, excludes inventory from current assets. BorgWarner's quick ratio has fluctuated between 1.16 and 1.32 over the same period. The quick ratio provides insight into the company's ability to meet its short-term liabilities using only its most liquid assets, and these fluctuations suggest some variations in the company's liquidity position without considering inventory.
The cash ratio, the most stringent liquidity measure that indicates the proportion of current liabilities that could be covered by cash alone, has varied from 0.27 to 0.48. The fluctuation in the cash ratio reflects BorgWarner's ability to meet its obligations using only cash, without relying on other current assets.
Overall, BorgWarner Inc's liquidity ratios show that the company has generally maintained a strong liquidity position, with the current ratio consistently above 1, indicating that it has had sufficient current assets to cover short-term obligations. The variations in the quick and cash ratios suggest some fluctuations in the company's liquidity position when considering only the most liquid assets. Monitoring these ratios over time can provide insights into BorgWarner's ability to meet its short-term financial obligations effectively.
Additional liquidity measure
| 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 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 104.47 | 106.21 | 127.51 | 125.29 | 20.15 | 124.51 | 123.81 | 124.39 | 50.69 | 112.07 | 121.45 | 140.38 | 154.60 | 121.25 | 105.76 | 103.46 | 45.52 | 107.66 | 110.96 | 109.22 |
The cash conversion cycle (CCC) of BorgWarner Inc fluctuated over the past eight quarters, ranging from a low of 41.23 days in Q4 2023 to a high of 60.24 days in Q2 2023. The CCC is a key metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
Analyzing the trend, BorgWarner Inc experienced a slight decrease in its CCC in Q4 2023 compared to the previous quarter, indicating potential improvements in managing its working capital and converting inventory into sales more efficiently. However, the CCC remains higher than the levels seen in the second half of 2022, suggesting the company may still face challenges in optimizing its cash conversion process.
Overall, BorgWarner Inc should continue to monitor and analyze its CCC closely to ensure effective management of working capital, streamline its operations, and enhance cash flow generation in the future.