Triumph Group Inc (TGI)

The liquidity ratios of Triumph Group Inc have shown varying trends over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with current assets, has generally been healthy and increasing over the period. In the most recent fiscal year ending March 31, 2024, the current ratio stands at 2.64, indicating that Triumph Group Inc has $2.64 in current assets for every $1 of current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Triumph Group Inc's quick ratio has shown improvement over the years, with a notable increase to 1.49 in 2024. This signifies that the company has $1.49 in quick assets, such as cash, marketable securities, and accounts receivable, for every $1 of current liabilities.

The cash ratio, which is the most conservative liquidity ratio, focuses solely on cash and cash equivalents compared to current liabilities. Triumph Group Inc's cash ratio has also demonstrated a positive trend over the years, reaching 1.10 in 2024. This means that the company has $1.10 in cash and cash equivalents to cover each $1 of short-term obligations.

Overall, the liquidity ratios of Triumph Group Inc paint a favorable picture of the company's ability to meet its short-term financial commitments. The increasing trend in these ratios reflects a strengthening liquidity position, indicating a healthier financial condition for the company.

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Additional liquidity measure

Triumph Group Inc's cash conversion cycle has shown a mixed trend over the past five years. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In 2020, Triumph Group had a substantially low cash conversion cycle of 44.50 days, indicating efficient management of working capital. However, this performance deteriorated in subsequent years, with the cycle increasing to 92.50 days in 2021, then further to 112.75 days in 2022. This upward trend suggests that the company may be facing challenges in effectively managing its inventory, accounts receivable, and accounts payable.

The cash conversion cycle improved slightly in 2023 to 111.47 days and then in 2024 to 105.46 days. While the recent decline is positive, Triumph Group should continue to focus on optimizing its working capital management to enhance operational efficiency and liquidity. Longer cash conversion cycles can indicate inefficiencies in the supply chain and potential cash flow constraints, which could impact the company's financial health and ability to meet its obligations.