CDW Corp (CDW)

CDW Corp's current ratio has shown some fluctuations over the years, ranging from 1.53 in 2020 to 1.23 in 2023. This ratio indicates the company's ability to cover its short-term obligations with its current assets. While a current ratio above 1 is generally considered healthy, the decreasing trend raises some concerns about CDW Corp's short-term liquidity position.

The quick ratio, which excludes inventory from current assets, paints a more conservative picture of CDW Corp's liquidity. The quick ratio has remained low throughout the years, ranging from 0.05 in 2021 to 0.13 in 2024. This suggests that the company may have difficulty meeting its short-term obligations without relying on selling inventory.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, shows a similar pattern to the quick ratio. CDW Corp's cash ratio has ranged from 0.05 in 2021 to 0.13 in 2024, indicating that the company has limited cash resources available to cover its immediate liabilities.

Overall, CDW Corp's liquidity ratios, especially the quick and cash ratios, highlight potential challenges in meeting short-term obligations without relying on inventory or obtaining additional financing. Monitoring these ratios closely is essential for assessing the company's ability to manage its liquidity effectively in the coming years.

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Additional liquidity measure

The cash conversion cycle of CDW Corp has shown a generally improving trend over the five-year period from December 31, 2020, to December 31, 2024.

Starting at 18.18 days in 2020, the company took about 19.62 days to convert its investments in inventory and accounts receivable into cash by the end of 2021. However, there was a noticeable improvement in efficiency in the following years, with the cash conversion cycle decreasing to 15.32 days by the end of 2022, further dropping to 14.58 days in 2023, and reaching its lowest point of 13.47 days by the end of 2024.

This decreasing trend indicates that CDW Corp has been able to more efficiently manage its working capital over the years, potentially improving its liquidity position and optimizing its cash flow. A shorter cash conversion cycle typically suggests that the company is able to quickly turn its investments into cash, which can be a positive sign of operational efficiency and effective management of inventory and receivables.