Lennox International Inc (LII)

The current ratio of Lennox International Inc has fluctuated over the years, indicating the company's ability to meet its short-term obligations. The current ratio ranged from a low of 0.94 on December 31, 2022, to a high of 1.71 on September 30, 2022. Overall, the company's current ratio appears to be relatively stable, with a slight increase towards the end of the period, reaching 1.43 on December 31, 2024.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows variability in Lennox International Inc's short-term liquidity position. The quick ratio ranged from a low of 0.42 on December 31, 2022, to a high of 0.87 on June 30, 2022. Despite some fluctuations, the quick ratio generally improved towards the end of the period, standing at 0.82 on December 31, 2024.

The cash ratio, which focuses solely on the most liquid assets, demonstrates the company's ability to cover its current liabilities with cash and cash equivalents. The cash ratio of Lennox International Inc ranged from a low of 0.03 on March 31, 2023, to a high of 0.32 on December 31, 2024. The company's cash ratio improved significantly in the latter part of the period, indicating a stronger ability to meet short-term obligations with cash reserves.

Overall, while there were fluctuations in the liquidity ratios of Lennox International Inc, the company managed to maintain a satisfactory level of liquidity to meet its short-term obligations. The upward trend in the current and cash ratios towards the end of the period is a positive sign for the company's liquidity position. However, management should closely monitor these ratios to ensure continued financial stability and the ability to weather unforeseen challenges.

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Additional liquidity measure

Lennox International Inc's cash conversion cycle, a measure of how efficiently the company manages its working capital, fluctuated over the periods provided in the data.

From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a high of 105.39 days in June 30, 2023, to a low of 57.45 days in December 31, 2021. A lower cash conversion cycle indicates that the company takes less time to convert its investments in inventory and other resources into cash from sales.

The trend in Lennox International Inc's cash conversion cycle shows some variation, with periods of increase and decrease. For example, there was a significant increase in the cash conversion cycle from June 30, 2023, to September 30, 2023, followed by a decrease by December 31, 2023. Such fluctuations may indicate changes in the company's efficiency in managing its working capital.

Analyzing the cash conversion cycle can provide insights into a company's liquidity and operational efficiency. A longer cash conversion cycle may suggest inefficiencies in managing inventory, collecting receivables, or paying suppliers. Conversely, a shorter cycle may indicate better working capital management.

Overall, monitoring changes in Lennox International Inc's cash conversion cycle over time can help evaluate the company's ability to efficiently manage its working capital and generate cash flow from its operational activities.