International Seaways Inc (INSW)

The analysis of International Seaways Inc's liquidity ratios over the past years reflects fluctuations in the company's ability to meet its short-term obligations.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. International Seaways Inc's current ratio showed an increasing trend from March 2020 to September 2023, indicating improving liquidity. The ratio peaked at 3.89 on June 30, 2024, but then decreased to 2.87 by December 31, 2024. Overall, the company maintained a current ratio above 1, suggesting it had more than enough current assets to cover its current liabilities throughout the period.

2. Quick Ratio: The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets. International Seaways Inc's quick ratio varied over the years, reaching its highest point of 3.08 on March 31, 2021. The ratio fell below 1 on several occasions, indicating potential difficulty in meeting short-term obligations without relying on inventory. It improved towards the end of the period, standing at 1.20 on December 31, 2024.

3. Cash Ratio: The cash ratio focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents. International Seaways Inc's cash ratio followed a similar trend to the quick ratio, peaking at 3.08 on March 31, 2021, and then fluctuating below 1 in the following periods, before increasing to 1.20 on December 31, 2024. This suggests that the company had a varying ability to meet its immediate payment obligations with cash alone.

In conclusion, International Seaways Inc's liquidity ratios have shown volatility over the past years, with improvements in certain periods and fluctuations in others. Maintaining a current ratio above 1 indicates a generally healthy liquidity position, although the variability in quick and cash ratios suggests varying levels of the company's ability to quickly meet short-term obligations without relying on inventory or non-cash assets.

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Additional liquidity measure

International Seaways Inc's cash conversion cycle has shown fluctuations over the periods analyzed.

In March 2020, the company had a cash conversion cycle of 4.72 days, indicating the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales. The cycle improved in the following quarters, reaching a low of 1.96 days by September 2020, suggesting efficient management of inventory and collections from customers.

However, the cycle increased significantly to 31.03 days in June 2021, which could indicate issues with inventory management or slower collection of receivables. Subsequently, the company managed to significantly reduce this cycle to 0.49 days by December 2022, demonstrating enhanced efficiency in working capital management.

Overall, the trend in International Seaways Inc's cash conversion cycle reflects improvements in working capital management, particularly in recent periods where the cycle has been reduced to lower levels, indicating better liquidity and operational efficiency. Maintaining a low cash conversion cycle is essential for the company to optimize its cash flows and enhance its financial performance.