Lennox International Inc (LII)

The current ratio for Lennox International Inc has shown fluctuation over the years, starting at 1.55 in 2020 and dropping to 0.94 in 2022 before recovering to 1.43 in 2024. This indicates a mixed trend in the company's ability to meet its short-term obligations with its current assets.

Similarly, the quick ratio, which measures the company's ability to meet its short-term obligations using its most liquid assets, has also displayed variability. It decreased from 0.82 in 2020 to 0.42 in 2022, implying potential challenges in meeting immediate liabilities, but then improved to 0.82 in 2024.

The cash ratio, which focuses solely on the most liquid assets, paints a different picture. The ratio was at its lowest in 2021 at 0.04 but experienced a notable increase to 0.32 in 2024. This suggests an enhancement in the company's ability to cover its current liabilities with cash on hand.

Overall, the liquidity ratios of Lennox International Inc have exhibited fluctuations over the years, indicating varying levels of ability to meet short-term obligations. Monitoring these ratios will be essential for assessing the company's ongoing liquidity position and financial health.

---

Additional liquidity measure

Lennox International Inc's cash conversion cycle has fluctuated over the past five years. In December 2020, the company's cash conversion cycle was 58.97 days, which decreased slightly to 57.45 days by December 2021. However, there was a significant increase in the cash conversion cycle to 81.69 days by December 2022, followed by a slight decrease to 78.04 days by December 2023. In the most recent year, December 2024, the cash conversion cycle improved to 67.14 days.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally preferable as it indicates that the company is able to quickly recover its costs and generate cash from its operations. Lennox International Inc's fluctuating cash conversion cycle over the years suggests potential changes in its inventory management efficiency, accounts receivable collection, and accounts payable payment practices. Further analysis of the drivers behind these fluctuations would provide insights into the company's working capital management strategies and operational performance.