Dana Inc (DAN)

Dana Inc's liquidity ratios show a mixed performance over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has fluctuated slightly but generally remained above 1.0. A current ratio above 1.0 indicates that Dana Inc has more current assets than current liabilities, providing a margin of safety.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Dana Inc's quick ratio has also fluctuated, but remained below 1.0 in the past three years. This indicates that the company may have difficulty meeting its short-term obligations without relying on inventory liquidation.

The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has shown a decreasing trend over the last five years. This indicates that Dana Inc may have limited cash on hand compared to its current liabilities, potentially posing a risk in meeting its short-term obligations solely from cash reserves.

Overall, while Dana Inc's current ratio suggests a good liquidity position, the decreasing trend in the quick and cash ratios may warrant further investigation into the company's ability to meet its short-term obligations.

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Additional liquidity measure

Dana Inc's cash conversion cycle has shown fluctuation over the past five years, indicating changing efficiency in its cash management and working capital processes. In 2023, the company's cash conversion cycle extended to 54.07 days, increasing from the previous year. This suggests that Dana Inc took longer to convert its investments in inventory into cash from sales, which could potentially tie up more funds in working capital.

Comparing to 2021, where the cash conversion cycle was at its peak of 62.57 days, the company has shown some improvement in managing its working capital and cash flow efficiency. However, the cycle has not returned to the lower levels seen in 2019 and 2020, indicating that there might still be room for further optimization in these areas.

Overall, the trend in Dana Inc's cash conversion cycle highlights the importance of closely monitoring working capital management to ensure optimal cash flow and liquidity position. The company should continue efforts to streamline its operations, improve inventory turnover, and shorten the time it takes to convert sales into cash to enhance its overall financial performance.