Light & Wonder Inc (LNW)

Light & Wonder Inc's liquidity ratios have shown fluctuating trends over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been somewhat volatile, ranging from 1.78 to 2.72. A higher current ratio indicates stronger liquidity, and while Light & Wonder Inc experienced a peak in 2022, the ratio decreased in 2023 but still remains above 1, indicating that the company can meet its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio also displayed variability across the years, with values ranging from 1.13 to 2.39. The company showed strong liquidity in 2022 with a quick ratio of 2.39, but this declined in 2023 to 1.50. Despite the decrease, the quick ratio remains above 1, suggesting that Light & Wonder Inc can cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents to current liabilities, also fluctuated over the years. Light & Wonder Inc's cash ratio ranged from 0.69 to 1.66, with a notably high value in 2022. However, in 2023, the ratio dropped to 0.77, indicating a lower ability to cover short-term obligations solely with cash and cash equivalents.

Overall, while there have been fluctuations in Light & Wonder Inc's liquidity ratios, the company generally maintains a decent level of liquidity to meet its short-term obligations. It's important for the company to monitor these ratios closely to ensure it has the necessary resources to navigate unexpected challenges and capitalize on opportunities.

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Additional liquidity measure

The cash conversion cycle of Light & Wonder Inc has shown significant fluctuations over the past five years. In 2023, the company's cash conversion cycle improved to 36.85 days, reflecting a more efficient management of working capital compared to the prior year. This reduction suggests that the company is now taking less time to convert its investments in inventory and accounts receivable into cash.

In contrast, the cash conversion cycle was significantly higher in 2022 at 69.57 days, indicating a longer period for the company to convert its resources into cash. The sharp increase in 2022 may have been due to issues such as inventory management challenges or delays in collecting receivables, which impacted the company's cash flow efficiency.

The year 2021 saw a remarkably low cash conversion cycle of 8.18 days, signifying a very efficient cash management process for Light & Wonder Inc. This exceptional performance may have been attributed to streamlined operational processes, effective inventory control, and prompt collection of receivables.

In 2020 and 2019, the company experienced prolonged cash conversion cycles of 78.76 days and 86.17 days, respectively. These extended cycles indicate that Light & Wonder Inc faced difficulties in efficiently managing its working capital during those years, leading to delays in converting investments into cash.

Overall, the varying trends in Light & Wonder Inc's cash conversion cycle suggest fluctuations in the company's liquidity management and working capital efficiency over the past five years. Further analysis of the underlying factors contributing to these fluctuations would be beneficial in understanding the company's cash flow dynamics and identifying areas for improvement.