CDW Corp (CDW)

CDW Corp's liquidity ratios provide insights into the company's ability to meet short-term obligations and sustain its operations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been fluctuating over the past five years. In 2023, the current ratio decreased to 1.23 from 1.33 in 2022, indicating a slight decline in short-term liquidity compared to the previous year. However, the current ratio remains above 1, suggesting that CDW Corp should be able to meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. CDW Corp's quick ratio followed a similar trend to the current ratio, showing a decrease in 2023 to 1.11 from 1.17 in 2022. This decline suggests that the company may have a slightly lower ability to cover its immediate liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity measure as it only considers cash and cash equivalents to cover current liabilities, has also shown fluctuations over the years. In 2023, CDW Corp's cash ratio increased to 0.18 from 0.16 in 2022, indicating a higher level of cash relative to current liabilities. This improvement in the cash ratio suggests that the company has a stronger ability to meet its short-term obligations with cash on hand.

Overall, while CDW Corp's liquidity ratios have varied over the years, the company generally maintains a reasonable level of liquidity to handle its short-term financial commitments. However, investors and stakeholders should continue to monitor these ratios to ensure ongoing liquidity adequacy.

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Additional liquidity measure

The cash conversion cycle of CDW Corp has shown some fluctuations over the past five years. In 2023, the company's cash conversion cycle increased slightly to 28.32 days from 27.45 days in 2022. This indicates that CDW Corp took slightly longer to convert its investments in inventory and accounts receivable into cash during the year 2023.

Comparing 2023 to previous years, the cash conversion cycle was lower than in 2021 but higher than in 2020 and 2019. This implies that CDW Corp improved its efficiency in managing its working capital in 2023 compared to 2021 but was slightly less efficient than in 2020 and 2019.

Overall, the cash conversion cycle is an important metric for assessing the efficiency of a company's working capital management. A shorter cash conversion cycle indicates that the company is able to generate cash quickly from its operating activities, which is generally seen as a positive sign of financial health and efficiency.