Dana Inc (DAN)

Dana Inc's liquidity ratios based on the provided data show some fluctuations over the years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Dana Inc's current ratio has gradually declined from 1.69 in 2020 to 0.28 in 2024. While the ratio was above 1 in the initial years, it fell significantly below 1 in 2024, indicating potential difficulties in meeting short-term obligations with current assets alone.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Dana Inc's quick ratio has been volatile over the years, ranging from 0.13 to 0.28. The ratio improved slightly from 2020 to 2024, indicating a better ability to meet short-term obligations with liquid assets.

3. Cash Ratio: The cash ratio specifically focuses on the company's ability to cover short-term obligations with cash and cash equivalents only. Dana Inc's cash ratio also shows fluctuations similar to the quick ratio, ranging from 0.13 to 0.28. The company seems to have maintained a relatively stable cash position over the years, as evidenced by the consistency in the cash ratio.

Overall, Dana Inc's liquidity ratios suggest a mixed performance in terms of its ability to meet short-term obligations. The declining trend in the current ratio raises concerns about the company's liquidity position, although improvements in the quick and cash ratios indicate a better ability to cover short-term obligations with more liquid assets.

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Additional liquidity measure

The cash conversion cycle for Dana Inc has shown fluctuating trends over the past five years. Starting at 64.67 days in December 2020, the cycle increased to 70.41 days by December 2021, indicating a potential delay in converting investments in raw materials to cash from sales. However, there has been a positive trend observed in the subsequent years, with the cycle decreasing to 62.52 days by December 2022, 63.36 days by December 2023, and reaching a low of 60.02 days by December 2024.

Overall, the decreasing trend suggests that Dana Inc has been managing its cash conversion cycle more efficiently over the years, which could signify improved inventory management, faster collections from customers, and/or better vendor payment terms. This trend is generally positive as a lower cash conversion cycle indicates that the company is able to convert its investments into cash more quickly, potentially leading to improved liquidity and working capital management.