Forward Air Corporation (FWRD)

Based on the provided data on Forward Air Corporation's liquidity ratios, we can observe the following trends:

1. Current ratio: The current ratio measures a company's ability to cover its short-term liabilities with its current assets. Over the past five years, Forward Air Corporation's current ratio has experienced some fluctuations. In 2023, the current ratio stands at 1.46, showing a slight decrease compared to the previous year's ratio of 1.80. However, it is still above 1, indicating that the company has sufficient current assets to cover its short-term obligations.

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. Forward Air Corporation's quick ratio has followed a similar trend to the current ratio, showing a decrease from 1.58 in 2022 to 1.18 in 2023. Despite this decline, the quick ratio remains above 1, suggesting that the company can meet its short-term liabilities even without relying on inventory.

3. Cash ratio: The cash ratio measures a company's ability to cover its current liabilities with its cash and cash equivalents alone. Forward Air Corporation's cash ratio has shown significant fluctuations over the past five years, with a notable increase in 2023 to 0.51 compared to the previous year's ratio of 0.27. This indicates an improvement in the company's ability to meet its short-term obligations using cash resources directly.

Overall, Forward Air Corporation's liquidity ratios demonstrate fluctuations over the years, with varying levels of liquidity and short-term solvency. The current ratio and quick ratio suggest that the company has generally maintained a healthy liquidity position, while the increasing trend in the cash ratio indicates a strengthening ability to cover short-term liabilities with cash reserves.

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Additional liquidity measure

The cash conversion cycle of Forward Air Corporation has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 9.47 days, indicating that it took approximately 9.47 days for the company to convert its investments in inventory and other resources into cash receipts from customers. This was a slight increase from the previous year's cycle of 8.85 days.

Compared to 2021 and 2020, where the cash conversion cycle was significantly higher at 15.12 days and 38.26 days, respectively, there has been a notable improvement in 2022 and 2023. This suggests that Forward Air Corporation has been managing its working capital more efficiently in recent years.

However, when looking at the trend over the five-year period, it is evident that the company has made progress in reducing its cash conversion cycle compared to 2019, where it was 37.30 days. This indicates that Forward Air Corporation has been successful in speeding up the conversion of investments into cash receipts, potentially enhancing liquidity and overall financial performance.