Light & Wonder Inc (LNW)

Light & Wonder Inc's liquidity ratios indicate the company's ability to meet its short-term obligations.

1. Current Ratio:
- The current ratio shows a fluctuating trend over the years, decreasing from 2.62 in 2020 to 1.61 in 2024. This downward trend suggests a potential weakening of the company's ability to cover its current liabilities with its current assets.
- A ratio above 1 indicates that the company has sufficient current assets to cover its current liabilities. Light & Wonder Inc maintained levels above 1 throughout the period, indicating a generally healthy liquidity position.

2. Quick Ratio:
- The quick ratio portrays a similar fluctuating pattern, dropping from 1.96 in 2020 to 1.06 in 2024. This decline indicates a reduction in the company's ability to meet its short-term obligations using its most liquid assets.
- A quick ratio above 1 signals that the company can cover its current liabilities without relying on inventory. Light & Wonder Inc maintained quick ratios above 1, though the declining trend warrants monitoring.

3. Cash Ratio:
- The cash ratio also demonstrates a decreasing trend from 1.22 in 2020 to 0.27 in 2024, indicating a diminishing ability to settle current liabilities solely with available cash and cash equivalents.
- A higher cash ratio indicates a stronger ability to cover short-term obligations with cash on hand. Light & Wonder Inc's declining cash ratio may imply a potential strain on cash resources for meeting immediate obligations.

In summary, Light & Wonder Inc's liquidity ratios show a mixed performance with fluctuations over the years. While the company generally maintained ratios above 1, signaling adequacy in meeting short-term obligations, the decreasing trends in these ratios suggest a potential need for closer monitoring of liquidity management to ensure the company's financial health.

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Additional liquidity measure

The cash conversion cycle of Light & Wonder Inc has fluctuated over the past five years.

In 2020, the company's cash conversion cycle was 88.30 days, indicating that it took approximately 88 days for the company to convert its investments in inventory and other resources into cash flows from sales.

By the end of 2021, the cash conversion cycle had improved significantly to 38.68 days, suggesting a more efficient management of working capital and quicker turnaround time for converting investments into cash receipts.

However, in 2022, the cash conversion cycle increased to 83.80 days, indicating a potential delay in converting resources into cash, which could be attributed to various factors such as slower sales or longer inventory turnover.

In 2023, there was a further improvement in the cash conversion cycle to 51.47 days, reflecting a more efficient working capital management compared to the previous year.

By the end of 2024, the cash conversion cycle stood at 63.46 days, showing a slight increase from the previous year but still below the levels observed in 2020 and 2022.

Overall, the fluctuations in Light & Wonder Inc's cash conversion cycle over the five-year period suggest varying levels of efficiency in managing working capital and converting investments into cash flows. Further analysis would be needed to understand the specific drivers behind these changes and assess the company's overall liquidity and operational performance.