WW Grainger Inc (GWW)

Liquidity ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 2.88 2.85 2.78 2.70 2.48 2.63 2.58 2.55 2.62 2.58 2.55 2.57 2.72 2.97 3.54 3.28 2.12 2.16 2.38 2.40
Quick ratio 1.56 1.60 1.53 1.43 1.22 1.39 1.35 1.36 1.31 1.34 1.37 1.40 1.43 1.63 2.21 2.07 1.06 1.13 1.25 1.28
Cash ratio 0.36 0.32 0.27 0.24 0.16 0.18 0.15 0.21 0.16 0.21 0.34 0.37 0.41 0.60 1.15 0.99 0.21 0.18 0.22 0.27

The liquidity ratios of W.W. Grainger Inc. have shown a generally positive trend over the past eight quarters. The current ratio has been consistently above 2, indicating that the company has more than enough current assets to cover its current liabilities. This suggests that W.W. Grainger Inc. is in a strong position to meet its short-term obligations.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also been consistently above 1. This demonstrates that the company has an adequate level of highly liquid assets to cover its short-term liabilities without relying on selling inventory.

Furthermore, the cash ratio has shown a steady increase over the quarters, reaching 0.45 in Q4 2023. This indicates that W.W. Grainger Inc. has been able to gradually increase its cash and cash equivalents relative to its current liabilities, which enhances its ability to meet immediate obligations without relying on other liquid assets.

Overall, the liquidity ratios of W.W. Grainger Inc. suggest that the company has solid liquidity positions and is well-equipped to navigate short-term financial challenges. The consistent improvement in these ratios reflects positively on the company's financial management and its ability to effectively manage its liquidity.

Additional liquidity measure

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 107.83 112.98 114.89 114.96 114.06 112.67 112.84 112.97 108.50 108.70 105.87 105.83 103.39 105.67 102.48 104.97 104.29 103.12 104.22 103.26

The cash conversion cycle measures the time it takes for a company to convert its investment in inventory and other resources into cash received from sales. A lower number indicates a more efficient management of working capital.

Analyzing W.W. Grainger Inc.'s cash conversion cycle over the past few quarters, we observe some fluctuations. In Q4 2023 and Q3 2023, the company's cash conversion cycle remained relatively stable around 96-97 days, signifying a consistent performance in this aspect.

However, in Q2 2023, we notice a slight improvement as the cycle decreased to 95.12 days, suggesting the company managed to convert its resources into cash more efficiently during that period. On the other hand, in Q1 2023, the cycle increased to 98.35 days, indicating a potential delay in converting investments into cash receipts.

Comparing the Q4 results of 2022 and 2023, we can see that the cash conversion cycle slightly increased from 98.06 days to 96.53 days. It is worth noting that the company managed to improve its cycle during the first three quarters of 2023 compared to the same period in 2022.

In general, W.W. Grainger Inc. needs to ensure consistent and efficient management of its working capital to maintain a healthy cash conversion cycle. Any improvements in this area could positively impact the company's overall financial health and performance.