Lennox International Inc (LII)

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 1.41 1.39 1.05 1.10 0.94 1.71 1.68 1.67 1.42 1.08 1.19 1.34 1.55 1.50 1.30 1.37 1.12 1.19 1.34 1.33
Quick ratio 0.65 0.67 0.52 0.45 0.42 0.81 0.87 0.75 0.66 0.57 0.70 0.66 0.82 0.85 0.71 0.60 0.52 0.60 0.70 0.58
Cash ratio 0.07 0.11 0.03 0.03 0.04 0.05 0.06 0.05 0.04 0.04 0.04 0.05 0.18 0.08 0.05 0.05 0.04 0.04 0.04 0.03

Lennox International Inc's liquidity ratios, specifically the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

- The current ratio has shown some volatility over the past eight quarters, ranging from 0.94 to 1.71. In Q4 2023, the current ratio stood at 1.41, indicating that the company has $1.41 in current assets for every $1 in current liabilities. This suggests that Lennox International Inc has a comfortable buffer to cover its short-term liabilities.

- The quick ratio, also known as the acid-test ratio, measures the company's ability to meet its short-term obligations with its most liquid assets. Lennox International Inc's quick ratio has also fluctuated over the quarters, ranging from 0.47 to 0.97. In Q4 2023, the quick ratio was 0.72, indicating that the company has $0.72 in highly liquid assets to cover each $1 of current liabilities. While the quick ratio is lower than the current ratio, it still suggests that Lennox International Inc has sufficient liquidity to meet its short-term obligations.

- The cash ratio provides an even more stringent measure of liquidity, focusing solely on the company's cash and cash equivalents relative to current liabilities. Lennox International Inc's cash ratio has also fluctuated, with values ranging from 0.08 to 0.18. In Q4 2023, the cash ratio was 0.14, implying that the company had $0.14 in cash for every $1 of current liabilities. Though the cash ratio is lower than the current and quick ratios, it still indicates that Lennox International Inc maintains a reasonable level of cash to meet its short-term obligations.

In conclusion, Lennox International Inc's liquidity ratios suggest that the company generally has a solid ability to cover its short-term liabilities with its current assets, with some fluctuations observed over the quarters. It is essential for the company to monitor and manage its liquidity effectively to ensure ongoing financial stability and ability to meet its obligations.


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 78.04 94.17 105.39 98.16 81.69 90.57 88.56 77.75 57.45 58.54 64.71 67.09 58.97 61.66 92.37 82.83 68.78 86.21 90.86 72.76

The cash conversion cycle (CCC) of Lennox International Inc has exhibited some fluctuations over the past eight quarters. The company's CCC peaked in Q2 2023 at 105.39 days, indicating a longer time taken to convert its investments in inventory and accounts receivable into cash flow. This was followed by a decrease in Q3 2023 to 94.17 days, showing some improvement.

However, in Q4 2023, the CCC further decreased to 78.04 days, signaling a more efficient management of working capital. Despite this improvement in the latest quarter, Lennox International Inc still has room to optimize its cash conversion cycle to enhance liquidity and operational efficiency in the future.

Overall, the trend in Lennox International Inc's CCC suggests that the company has experienced fluctuations in its ability to efficiently convert its resources into cash over the past two years, indicating the need for ongoing monitoring and potential strategic adjustments in working capital management practices.