Sherwin-Williams Co (SHW)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.79 | 0.83 | 0.81 | 0.78 | 0.83 | 0.94 | 1.00 | 1.00 | 0.99 | 1.00 | 0.87 | 0.88 | 0.88 | 0.83 | 0.84 | 0.90 | 1.00 | 1.19 | 1.09 | 0.94 |
| Quick ratio | 0.03 | 0.03 | 0.03 | 0.02 | 0.04 | 0.08 | 0.03 | 0.02 | 0.03 | 0.02 | 0.04 | 0.06 | 0.03 | 0.05 | 0.04 | 0.06 | 0.05 | 0.14 | 0.04 | 0.05 |
| Cash ratio | 0.03 | 0.03 | 0.03 | 0.02 | 0.04 | 0.08 | 0.03 | 0.02 | 0.03 | 0.02 | 0.04 | 0.06 | 0.03 | 0.05 | 0.04 | 0.06 | 0.05 | 0.14 | 0.04 | 0.05 |
The liquidity ratios of Sherwin-Williams Co, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's short-term financial health and ability to meet its immediate obligations.
1. Current Ratio: The current ratio measures the company's ability to pay its short-term liabilities with its short-term assets. A ratio below 1 indicates that the company may have difficulty meeting its short-term obligations. Over the period from March 31, 2020, to December 31, 2024, Sherwin-Williams Co's current ratio fluctuated, ranging from a low of 0.78 to a high of 1.19. The ratio improved from the first quarter of 2020 to reach a peak in the third quarter of 2020 before declining and stabilizing around 0.8 - 1.0 in the later periods.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. A quick ratio below 1 may indicate a potential liquidity issue. Sherwin-Williams Co's quick ratio fluctuated during the same period, with values oscillating between 0.02 and 0.14. The ratio mostly remained below 0.1, reaching its highest levels in the third quarter of 2020 before trending downwards.
3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover its short-term liabilities with cash and cash equivalents. Similar to the quick ratio, a cash ratio below 1 might signify a liquidity challenge. Over the period under review, Sherwin-Williams Co's cash ratio mirrored the trends of the quick ratio, with values ranging from 0.02 to 0.14. The company's ability to cover its obligations with cash fluctuated, staying predominantly below 0.1.
In summary, the liquidity ratios of Sherwin-Williams Co demonstrate fluctuations over the review period, with varying levels of short-term solvency. The current ratio generally stayed close to or above 1, indicating an ability to meet short-term obligations, albeit with fluctuations. However, the quick and cash ratios, being more conservative measures, revealed potential liquidity concerns, especially with values consistently below 0.1. Investors and stakeholders should closely monitor these ratios to assess Sherwin-Williams Co's ability to manage its short-term financial obligations effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 70.16 | 69.65 | 69.93 | 71.68 | 69.17 | 65.08 | 69.31 | 76.62 | 74.76 | 73.17 | 71.81 | 72.01 | 61.69 | 60.93 | 62.48 | 67.66 | 68.03 | 64.01 | 68.61 | 72.69 |
Sherwin-Williams Co's cash conversion cycle fluctuated over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. In Sherwin-Williams Co's case, the cycle ranged from a low of 60.93 days on September 30, 2021, to a high of 76.62 days on March 31, 2023.
A shorter cash conversion cycle indicates that the company is able to efficiently manage its working capital and convert its inventory into cash quickly. Conversely, a longer cycle may suggest potential issues such as slow inventory turnover or challenges in collecting accounts receivable.
Overall, the trend in Sherwin-Williams Co's cash conversion cycle showed some volatility, with periods of improvement followed by slight upticks. Analyzing the components of the cycle, such as inventory turnover and accounts receivable collection, can provide insights into the company's operational efficiency and cash flow management.