Timken Company (TKR)

Liquidity ratios

	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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Current ratio	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	2.54	2.57	2.68	2.81
Quick ratio	0.76	0.74	1.17	1.20	1.06	0.88	1.19	1.35	0.99	1.14	1.18	1.11	1.06	1.19	1.44	1.25	1.06	1.04	1.09	1.24
Cash ratio	0.31	0.27	0.37	0.39	0.37	0.27	0.36	0.49	0.29	0.31	0.36	0.33	0.38	0.42	0.63	0.50	0.32	0.26	0.24	0.35

Liquidity ratios provide insight into a company's ability to meet its short-term financial obligations. Let's analyze Timken Co.'s liquidity ratios based on the given data:

1. Current Ratio: Timken Co.'s current ratio has fluctuated over the quarters, ranging from 1.73 to 2.76. The current ratio measures the company's ability to cover its short-term liabilities with its current assets. A current ratio above 1 indicates that the company has more assets than liabilities, with higher values suggesting a stronger ability to meet short-term obligations. Timken Co.'s current ratio has generally been above 2 in recent quarters, indicating a healthy liquidity position.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Timken Co.'s quick ratio has varied between 0.93 and 1.66. A quick ratio above 1 suggests that the company can meet its short-term obligations without relying on the sale of inventory. Timken Co.'s quick ratio has mostly been above 1, indicating a reasonable ability to cover its short-term liabilities with its most liquid assets.

3. Cash Ratio: The cash ratio focuses solely on the company's ability to cover its short-term liabilities with its cash and cash equivalents. Timken Co.'s cash ratio has ranged from 0.37 to 0.70. A cash ratio below 1 indicates that the company relies on sources other than cash to meet its short-term obligations. While Timken Co.'s cash ratio has generally been below 1, it has shown some variation, suggesting fluctuations in the company's cash position.

Overall, Timken Co. has demonstrated a strong liquidity position based on its current, quick, and cash ratios. The company has consistently maintained ratios above industry benchmarks, indicating a solid ability to meet its short-term financial commitments. However, it is essential to monitor these ratios regularly to ensure continued liquidity stability.

Additional liquidity measure

		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	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Cash conversion cycle	days	128.74	149.70	157.76	152.90	149.52	150.83	156.86	151.53	134.30	137.20	139.60	146.94	135.68	132.83	133.16	130.00	127.33	127.76	134.71	139.42

The cash conversion cycle of Timken Co. has shown some variations over the past eight quarters. The cycle measures the time it takes for a company to convert its investments in inventory into cash from sales of finished goods.

In Q4 2023, the cash conversion cycle stood at 158.97 days, showing a slight improvement from the previous quarter where it was 159.94 days. This indicates that the company was able to manage its inventory, accounts receivable, and accounts payable more efficiently, resulting in a quicker conversion of assets into cash.

However, Q2 2023 saw a spike in the cash conversion cycle to 166.40 days, which may suggest that the company faced challenges in managing its working capital effectively during that period. It is essential for the company to analyze the reasons behind this increase and take corrective actions to optimize its cash conversion cycle.

Overall, the trend in the cash conversion cycle of Timken Co. over the past eight quarters shows some fluctuations, highlighting the importance of monitoring working capital management closely to ensure efficient operations and healthy cash flows.