Louisiana-Pacific Corporation (LPX)

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 3.00 2.80 2.51 3.11 2.54 2.33 2.60 2.92 2.54 2.80 3.48 3.41 3.47 3.70 3.15 4.56 2.54 3.52 3.62 3.56
Quick ratio 1.46 1.28 0.91 1.20 1.48 1.49 1.56 2.06 1.50 2.04 2.58 2.55 2.55 2.70 1.98 3.08 1.41 2.25 2.29 2.22
Cash ratio 0.86 0.60 0.27 0.55 1.10 1.09 1.08 1.36 1.02 1.46 1.70 1.82 1.91 1.77 1.18 2.28 0.74 1.41 1.52 1.52

Louisiana-Pacific Corp.'s liquidity ratios have shown some fluctuations over the past eight quarters. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been relatively stable, ranging from 2.52 to 3.12. A current ratio of 1 or higher is generally considered satisfactory, indicating the company has more than enough current assets to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. The company's quick ratio has fluctuated more significantly, ranging from 0.99 to 2.09, with a low point in Q2 2023. A quick ratio of 1 or higher is typically considered acceptable, as it indicates the company can meet its short-term obligations without relying on selling inventory.

The cash ratio, which measures the company's ability to cover its current liabilities with its most liquid assets, has also fluctuated over the quarters, ranging from 0.34 to 1.39. A cash ratio of 0.5 or higher is generally preferred, as it suggests the company has sufficient cash to cover its short-term liabilities without relying on selling other assets.

Overall, while Louisiana-Pacific Corp.'s liquidity ratios have displayed some variability, the company generally maintains healthy liquidity levels across the quarters, with current and quick ratios consistently above 1 and cash ratio fluctuating but mostly within acceptable ranges. Management should continue to monitor these ratios to ensure the company maintains its ability to meet its short-term obligations effectively.

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 91.32 92.10 91.21 82.60 64.24 68.96 70.50 95.15 64.44 93.75 100.36 102.91 88.36 80.02 74.13 79.44 74.13 74.94 78.57 76.90

The cash conversion cycle for Louisiana-Pacific Corp. has shown some fluctuations in recent quarters. In Q4 2023, the company's cash conversion cycle was 65.43 days, reflecting a shorter period compared to the previous quarter, Q3 2023, which had a cycle of 98.11 days. This improvement suggests that the company was able to more efficiently convert its investments in inventory and accounts receivable into cash during the fourth quarter.

Looking at a longer historical trend, there is a noticeable increase in the cash conversion cycle from Q1 2022 to Q1 2023, indicating that the company required more time to convert its resources into cash over the year. However, the cycle decreased in Q4 2022 and further improved in Q4 2023, signaling potential operational enhancements and better management of working capital during these periods.

Overall, fluctuations in the cash conversion cycle can be influenced by various factors, such as inventory management, sales terms, and accounts receivable collection efficiency. It is essential for Louisiana-Pacific Corp. to continue monitoring and optimizing its cash conversion cycle to ensure effective utilization of its resources and maintain healthy liquidity levels.