Timken Company (TKR)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Current ratio 3.07 3.00 2.95 1.87 1.79 1.73 2.65 2.76 2.47 2.03 2.69 2.94 2.47 2.60 2.56 2.34 2.36 2.65 3.02 2.72
Quick ratio 0.45 0.47 0.51 0.30 0.31 0.27 0.37 0.39 0.37 0.27 0.36 0.56 0.35 0.36 0.42 0.38 0.42 0.42 0.63 0.50
Cash ratio 0.45 0.47 0.51 0.30 0.31 0.27 0.37 0.39 0.37 0.27 0.36 0.56 0.35 0.36 0.42 0.38 0.42 0.42 0.63 0.50

Timken Company's liquidity ratios show a varying but generally stable trend over the reported periods. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, fluctuated between 1.73 and 3.07. The highest current ratio was observed on December 31, 2024, indicating the company had $3.07 in current assets for every $1 of current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventory from current assets. Timken Company's quick ratio ranged from 0.27 to 0.63, with the lowest ratio recorded on September 30, 2022. This suggests that the company may have had difficulty meeting its immediate obligations without relying on the sale of inventory during that period.

The cash ratio, a more conservative measure of liquidity, reflects the company's ability to cover its current liabilities using only its cash and cash equivalents. Timken Company's cash ratio fluctuated between 0.27 and 0.63, indicating the company had varying levels of readily available cash to meet short-term obligations.

Overall, the liquidity ratios of Timken Company show fluctuations over time but generally indicate a reasonable ability to meet its short-term liabilities, with some periods of potential liquidity strain. Monitoring these ratios can provide insights into the company's ability to manage its short-term financial obligations effectively.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020
Cash conversion cycle days 138.54 144.14 141.41 139.39 136.89 133.56 138.37 135.96 135.97 129.75 134.07 130.94 125.59 122.14 121.06 122.11 122.67 115.84 114.72 114.39

The cash conversion cycle of Timken Company has shown some fluctuations over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.

Initially, in 2020, the cash conversion cycle was around 115 days, indicating that Timken Company had a moderate conversion period. However, by the end of 2024, the cash conversion cycle had increased to approximately 138 days. This increase suggests that the company might be facing challenges in effectively managing its inventory, accounts receivable, and accounts payable.

The upward trend in the cash conversion cycle indicates the company could be experiencing delays in collecting cash from customers or facing difficulties in optimizing inventory levels. A longer cash conversion cycle can tie up valuable resources and affect the company's liquidity and overall financial performance.

It would be beneficial for Timken Company to focus on improving its working capital management practices to reduce the cash conversion cycle and enhance its operational efficiency. By streamlining inventory management, speeding up accounts receivable collections, and negotiating better payment terms with suppliers, the company can potentially shorten its cash conversion cycle and improve its cash flow position.