Smurfit WestRock plc (SW)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Dec 31, 2022 | Jun 30, 2022 | Dec 31, 2021 | |
|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.37 | 1.48 | 2.27 | — | 1.51 | — | 1.57 | 1.49 | — | — |
| Quick ratio | 0.12 | 0.15 | 2.27 | — | 0.33 | — | 0.23 | 0.26 | — | — |
| Cash ratio | 0.12 | 0.15 | 2.27 | — | 0.33 | — | 0.23 | 0.26 | — | — |
Smurfit WestRock plc's liquidity ratios show varying levels of liquidity over the reported periods.
1. Current Ratio: The company's current ratio has fluctuated throughout the periods. It was not available for some periods but generally improved towards the latter part of the reporting period. The current ratio was 1.49 as of December 31, 2022, and increased to 1.57 by June 30, 2023. It continued to vary with readings of 1.51 on December 31, 2023, 2.27 on June 30, 2024, and finally settled at 1.37 by December 31, 2024.
2. Quick Ratio: Smurfit WestRock plc's quick ratio, a measure of the company's ability to meet short-term obligations with its most liquid assets, also exhibited fluctuations over the reported periods. The quick ratio was 0.26 as of December 31, 2022, decreased to 0.23 by June 30, 2023, and then showed a slight improvement to 0.33 on December 31, 2023. Notably, there was a significant increase to 2.27 on June 30, 2024, followed by a drop to 0.12 by December 31, 2024.
3. Cash Ratio: The cash ratio of Smurfit WestRock plc, which indicates the proportion of current liabilities that could be covered by the company's cash and cash equivalents, also experienced fluctuations over the periods. Similar to the quick ratio, the cash ratio was 0.26 as of December 31, 2022, decreased to 0.23 by June 30, 2023, and then rose to 0.33 on December 31, 2023. There was a significant jump to 2.27 on June 30, 2024, followed by a decline to 0.12 by December 31, 2024.
In summary, while the current ratio generally improved over the periods, the quick ratio and cash ratio exhibited more volatility. The significant increase in the quick and cash ratios on June 30, 2024, raises questions about the composition of the current assets and whether this level of liquidity is sustainable or a one-time event. Further analysis and context are needed to understand the fluctuations in liquidity ratios and their implications for the company's financial health.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Dec 31, 2022 | Jun 30, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 68.15 | 79.51 | 0.00 | 0.00 | 26.38 | 0.00 | 23.00 | 25.88 | 0.00 | 0.00 |
The cash conversion cycle (CCC) is a key financial metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.
For Smurfit WestRock plc, the CCC shows some fluctuations over the periods provided. The company had a CCC of 0.00 days at the end of December 2021, June 2022, September 2023, March 2024, and June 2024, indicating efficient management of its working capital during these periods.
However, there were periods where the CCC increased significantly. For instance, the CCC increased to 25.88 days at the end of December 2022, then decreased to 23.00 days by June 2023, showing some improvement in working capital efficiency. Subsequently, there was another increase to 26.38 days by December 2023.
The most notable increase in the CCC occurred at the end of September 2024 and December 2024, where the CCC rose to 79.51 days and 68.15 days, respectively. These longer cash conversion cycles may indicate potential issues with managing inventory levels, collecting receivables, or paying off payables efficiently.
Overall, it is crucial for Smurfit WestRock plc to continuously monitor its cash conversion cycle and work towards optimizing it to ensure effective management of working capital and sustained cash flows.