Steel Dynamics Inc (STLD)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 2.53 | 2.91 | 3.76 | 3.10 | 3.38 |
| Quick ratio | 0.34 | 0.91 | 1.11 | 0.56 | 1.09 |
| Cash ratio | 0.34 | 0.91 | 1.11 | 0.56 | 1.09 |
Steel Dynamics Inc's liquidity ratios show fluctuations over the years. The current ratio, which indicates the company's ability to meet short-term obligations with its current assets, decreased from 3.38 in 2020 to 2.53 in 2024. This suggests a slight weakening in the company's short-term liquidity position.
Furthermore, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, fell from 1.09 in 2020 to 0.34 in 2024. This indicates a significant decline in the company's immediate ability to cover its short-term liabilities with its most liquid assets.
The cash ratio, which provides a view of the company's ability to pay off its current liabilities with cash and cash equivalents, also showed a downward trend from 1.09 in 2020 to 0.34 in 2024. This indicates a reduced capacity to settle immediate obligations purely with available cash resources.
In summary, Steel Dynamics Inc's liquidity ratios have shown a weakening trend over the years, signaling potential challenges in meeting short-term financial commitments with its current assets and cash reserves. It is advisable for the company to carefully manage its liquidity position to ensure financial stability and solvency.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 77.12 | 71.63 | 70.77 | 98.79 | 82.39 |
The cash conversion cycle of Steel Dynamics Inc has shown fluctuations over the past five years. In December 2020, the company had a cash conversion cycle of 82.39 days. This increased to 98.79 days by December 2021, reflecting a potential delay in converting its raw materials into cash.
However, by December 2022, the cash conversion cycle decreased significantly to 70.77 days, indicating an improvement in the company's efficiency in converting inventory to cash. This trend continued into December 2023, with a slightly higher cycle of 71.63 days, showing a stable cash conversion process.
In December 2024, Steel Dynamics Inc experienced a slight increase in its cash conversion cycle to 77.12 days compared to the previous year. Overall, the company's management of its operating cycle has displayed variability, with periods of both improvement and slight deterioration. Monitoring and optimizing this cycle will be crucial for maintaining healthy cash flow and operational efficiency in the future.