Sherwin-Williams Co (SHW)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.83 | 0.99 | 0.88 | 1.00 | 1.02 |
| Quick ratio | 0.41 | 0.46 | 0.44 | 0.50 | 0.50 |
| Cash ratio | 0.04 | 0.03 | 0.03 | 0.05 | 0.04 |
Sherwin-Williams Co.'s liquidity ratios have shown a declining trend over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has decreased from 1.02 in 2019 to 0.83 in 2023. This indicates that the company may have difficulties meeting its short-term obligations.
The quick ratio, a more stringent measure of liquidity that excludes inventories from current assets, has also decreased over the years from 0.61 in 2019 to 0.48 in 2023. This suggests that the company's ability to cover its short-term liabilities with its most liquid assets has weakened.
Furthermore, the cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents alone, has also shown a downward trend, from 0.14 in 2019 to 0.11 in 2023. This implies that the company's reliance on cash to meet its short-term obligations has decreased.
Overall, the declining liquidity ratios of Sherwin-Williams Co. may raise concerns about its short-term financial health and ability to cover its immediate financial obligations. It may be prudent for the company to closely monitor its liquidity position and consider strategies to improve its liquidity in the coming years.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 40.20 | 46.66 | 34.00 | 34.75 | 43.09 |
The cash conversion cycle of Sherwin-Williams Co. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 39.52 days, which decreased from 47.65 days in 2022. This implies that in 2023, Sherwin-Williams took 39.52 days to convert its investments in inventory and accounts receivable into cash received from the sales of its products.
Comparing to previous years, the company's cash conversion cycle was significantly shorter in 2021 at 27.82 days and slightly increased to 29.48 days in 2020. However, the cycle was longer in 2019 at 43.09 days.
The fluctuations in the cash conversion cycle are indicative of changes in the company's efficiency in managing its working capital, including inventory and accounts receivable. A shorter cash conversion cycle typically indicates that the company is able to convert its resources into cash more quickly, which can be seen as a positive indicator of financial health and operational efficiency. Conversely, a longer cash conversion cycle may suggest inefficiencies in managing working capital and could lead to liquidity issues.
Overall, the trend in Sherwin-Williams Co.'s cash conversion cycle indicates variability in the company's ability to efficiently manage its working capital over the past five years. This metric is important for understanding how quickly the company can convert its investments into cash and can provide insights into the company's operational effectiveness and financial performance.