Smurfit WestRock plc (SW)

Based on the provided data, let's analyze the liquidity ratios of Smurfit WestRock plc:

1. Current Ratio:
- The current ratio measures the company's ability to meet its short-term obligations using its current assets. Smurfit WestRock plc's current ratio has been relatively stable over the years, ranging from 1.44 to 1.51.
- A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered a good sign. Smurfit WestRock plc's current ratio values suggest that it has been able to cover its short-term liabilities comfortably.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Smurfit WestRock plc's quick ratio has varied but remained low, ranging from 0.26 to 0.40.
- A quick ratio below 1 may indicate a potential difficulty in meeting short-term obligations without relying on selling inventory. Smurfit WestRock plc's quick ratio values indicate a relatively lower level of liquidity when excluding inventory from the calculation.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on the company's ability to cover current liabilities with its cash and cash equivalents. Smurfit WestRock plc's cash ratio mirrors the quick ratio values, ranging from 0.26 to 0.40.
- A cash ratio below 1 implies that the company does not have enough cash to cover its current liabilities outright. The values of Smurfit WestRock plc's cash ratio suggest a relatively low level of liquidity when considering only cash and cash equivalents.

In summary, Smurfit WestRock plc has maintained a stable current ratio above 1, indicating a satisfactory liquidity position in terms of covering short-term obligations with current assets. However, the lower quick and cash ratios suggest a potential weakness in the company's ability to meet immediate liabilities without relying on inventory or cash equivalents. Monitoring these ratios over time can provide insights into the company's evolving liquidity position.

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Additional liquidity measure

The cash conversion cycle of Smurfit WestRock plc has shown some variations over the years. As of December 31, 2020, the company's cash conversion cycle stood at 50.59 days, indicating that it took approximately 50.59 days for the company to convert its investments in inventory into cash receipts from customers.

By December 31, 2021, the cash conversion cycle had slightly increased to 54.95 days, suggesting a longer period for the company to convert its inventory into cash. However, the cycle improved in the following year, as of December 31, 2022, dropping to 51.76 days.

Moreover, by December 31, 2023, the cash conversion cycle decreased further to 50.52 days, indicating an efficient management of working capital. Interestingly, as of December 31, 2024, the cash conversion cycle was recorded as 0.00 days. This may suggest either an exceptional efficiency in converting inventory to cash, or it could be an anomaly that requires further investigation.

Overall, the trend in Smurfit WestRock's cash conversion cycle shows fluctuations but generally indicates the company's effectiveness in managing its working capital and liquidity over the years.