Dow Inc (DOW)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 1.61 1.66 1.75 1.80 1.77 1.79 1.92 1.85 1.81 1.61 1.64 1.70 1.58 1.59 1.65 1.69 1.72 1.74 1.74 1.63
Quick ratio 0.88 1.06 1.07 1.13 1.14 1.02 1.10 1.12 1.11 0.89 0.92 1.02 0.97 0.98 1.03 1.10 1.13 1.14 1.08 1.01
Cash ratio 0.21 0.39 0.38 0.44 0.47 0.30 0.31 0.38 0.43 0.19 0.19 0.26 0.25 0.24 0.29 0.37 0.46 0.45 0.38 0.33

Dow Inc's liquidity ratios indicate the company's ability to meet its short-term obligations.

1. Current Ratio: The current ratio measures the company's ability to pay off its short-term liabilities with its short-term assets. Dow Inc's current ratio has fluctuated over the years, ranging from a low of 1.58 to a high of 1.92. Overall, the current ratio has generally been above 1, indicating that the company has more current assets than current liabilities, which is a positive sign for creditors and investors.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Dow Inc's quick ratio has also varied over time, with values ranging from 0.88 to 1.14. Generally, the quick ratio has been above 1, suggesting that the company has an adequate level of liquid assets to cover its short-term liabilities without relying on inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity metric, focusing solely on the company's ability to cover short-term liabilities with cash and cash equivalents. Dow Inc's cash ratio has shown some fluctuations, with values ranging from 0.19 to 0.47. While the cash ratio has been relatively lower compared to the current and quick ratios, it still indicates that the company has a reasonable level of cash reserves to meet its immediate payment obligations.

In conclusion, Dow Inc's liquidity ratios have generally remained at satisfactory levels, with the current and quick ratios consistently above 1, signaling a healthy liquidity position. The cash ratio, although varying, also indicates the company's ability to cover short-term obligations with cash on hand. Overall, these ratios suggest that Dow Inc is in a solid financial position to meet its short-term financial commitments.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 58.34 59.09 55.44 55.55 51.95 57.85 59.31 55.28 48.10 52.16 56.90 56.48 55.21 63.67 68.72 69.99 67.93 70.57 72.34 74.09

The cash conversion cycle measures the time it takes for a company to convert its investment in inventory back into cash. Dow Inc's cash conversion cycle has shown fluctuations over the years.

From March 31, 2020, to June 30, 2022, the cash conversion cycle steadily decreased from 74.09 days to 56.90 days, indicating an improvement in efficiency in managing its inventories, accounts receivables, and accounts payables. This suggests that Dow Inc was able to generate cash more quickly from its operating cycle during this period.

However, from September 30, 2022, to December 31, 2024, the cash conversion cycle started to increase again, reaching 58.34 days by the end of December 2024. This rise could indicate potential issues, such as slower inventory turnover, longer collection periods for accounts receivables, or delayed payment of accounts payables, which may affect the company's liquidity and overall financial health.

Overall, while Dow Inc has shown improvement in its cash conversion cycle in the past, the recent upward trend should be monitored closely to ensure efficient working capital management and sustained cash flow generation in the future.