Tidewater Inc (TDW)

The liquidity ratios of Tidewater Inc have shown a decline over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has decreased from 2.89 in 2019 to 1.80 in 2023. This trend indicates a potential weakening of Tidewater's short-term liquidity position.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also exhibited a downward trend, falling from 1.87 in 2019 to 0.84 in 2023. This suggests that Tidewater may be facing challenges in meeting its immediate liabilities without relying on inventory as a liquid asset.

The cash ratio, which specifically assesses the company's ability to cover its current liabilities with cash and cash equivalents, has fluctuated over the years, showing a decline from 1.18 in 2019 to 0.83 in 2023. This indicates that Tidewater's cash reserves may have decreased relative to its current liabilities, potentially impacting its ability to meet short-term obligations solely with cash.

Overall, the declining trend in Tidewater Inc's liquidity ratios implies a potential risk regarding its short-term financial health and ability to meet obligations promptly. It may be advisable for the company to closely monitor and manage its liquidity position to ensure stability and financial resilience in the future.

---

Additional liquidity measure

Analyzing Tidewater Inc's cash conversion cycle over the past five years reveals fluctuations in efficiency and effectiveness in managing cash flows. In 2019, the company had a significantly prolonged cash conversion cycle of 93.00 days, indicating a delayed conversion of investments in inventory and receivables into cash. Subsequently, in 2020, the cash conversion cycle improved to 67.67 days, suggesting a more efficient cash management process.

However, a substantial improvement was observed in 2021, with the cash conversion cycle decreasing to -6.45 days, indicating the company's ability to convert sales back into cash even before paying suppliers, potentially due to higher payables turnover. This negative cycle implies that Tidewater Inc was able to operate without tying up funds in working capital.

Continuing the trend of efficiency, the company further decreased its cash conversion cycle to -4.73 days in 2022 and -4.41 days in 2023, reflecting a consistent improvement in managing operating cash flows. The negative values in 2021, 2022, and 2023 suggest that Tidewater Inc continued to manage its cash flows effectively, potentially by negotiating better credit terms with suppliers or accelerating the collection of receivables.

Overall, the trend indicates that Tidewater Inc has made significant strides in optimizing its cash conversion cycle, enhancing liquidity, and potentially reducing the need for external financing to support operations. It is essential for the company to sustain this positive trend by focusing on efficient management of inventories, receivables, and payables to strengthen its financial position and improve overall operational performance.