Dow Inc (DOW)

Dow Inc's current ratio, which measures the company's ability to cover short-term obligations with its current assets, has shown some fluctuations over the years. The ratio decreased from 1.72 in 2020 to 1.58 in 2021 but then improved to 1.81 in 2022 before slightly dropping to 1.77 in 2023 and further to 1.61 in 2024. Generally, a current ratio above 1 indicates that the company can meet its short-term liabilities.

The quick ratio, a more conservative measure of liquidity that excludes inventory from current assets, also displayed variability. It decreased from 1.13 in 2020 to 0.97 in 2021, then increased to 1.11 in 2022, 1.14 in 2023, and decreased to 0.88 in 2024. A quick ratio above 1 suggests a good ability to cover short-term obligations without relying on selling inventory.

Lastly, the cash ratio, indicating the proportion of current liabilities that can be covered by cash and cash equivalents, showed a similar trend. It declined from 0.46 in 2020 to 0.25 in 2021, rose to 0.43 in 2022, 0.47 in 2023, and then fell to 0.21 in 2024. A higher cash ratio implies stronger financial flexibility and ability to meet short-term obligations without relying on other current assets.

Overall, Dow Inc's liquidity ratios reflect some variability over the years, but generally, they indicate the company's ability to meet its short-term financial obligations. Monitoring these ratios is important for assessing the company's liquidity risk and financial health.

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Additional liquidity measure

The cash conversion cycle of Dow Inc has shown improvement over the years. From 67.93 days in December 2020, it decreased to 55.21 days in December 2021, indicating a more efficient management of working capital. This trend continued with a further reduction to 48.10 days by December 2022, highlighting the company's ability to convert its resources into cash more quickly. However, there was a slight increase to 51.95 days in December 2023, possibly due to changes in the business environment or industry conditions. By December 2024, the cash conversion cycle increased to 58.34 days, suggesting a potential slowdown in the conversion of inventory and receivables into cash. Overall, monitoring and managing the cash conversion cycle will remain crucial for Dow Inc to optimize its working capital efficiency and liquidity position in the future.