Titan International Inc (TWI)

Based on the provided data for Titan International Inc, let's analyze the liquidity ratios:

1. Current Ratio:
- The current ratio measures the company's ability to pay its short-term obligations with its short-term assets.
- Titan International Inc's current ratio ranged from 1.80 to 2.35 over the five-year period.
- A higher current ratio indicates a stronger liquidity position. The company's current ratio has generally been healthy, staying above 1.5, a benchmark for good liquidity.

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.
- Titan International Inc's quick ratio ranged from 0.22 to 0.60 during the same period.
- A quick ratio above 1 is generally preferred, but the company's quick ratio fluctuated below this threshold. This suggests that Titan International Inc may have some difficulty meeting its short-term obligations without relying on inventory sales.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, focusing solely on cash and cash equivalents to cover current liabilities.
- Titan International Inc's cash ratio remained constant at 0.51 or 0.60 over the years, indicating the company's liquidity position relies heavily on cash reserves.
- While a cash ratio above 0.20 is seen as healthy, the company could have relatively limited liquid resources compared to current obligations, as seen in the consistent but moderate cash ratio.

In conclusion, Titan International Inc generally maintained a healthy current ratio, but its quick ratio and cash ratio suggest a reliance on inventory and limited cash reserves to meet short-term obligations. Continued monitoring of liquidity and working capital management may be necessary to ensure the company's financial stability.

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Additional liquidity measure

The cash conversion cycle is used to assess the efficiency of Titan International Inc in managing its cash flows related to its operations. Over the past five years, the company's cash conversion cycle has fluctuated.

In December 31, 2020, the cash conversion cycle was 93.62 days, indicating that it took the company approximately 93.62 days to convert its investments in inventory into cash receipts from customers. By December 31, 2021, the cycle slightly improved to 92.89 days.

In the subsequent years, there were further fluctuations in the cash conversion cycle. By December 31, 2022, the cycle decreased to 80.16 days, signaling an improvement in the efficiency of managing inventory and collecting receivables. However, in December 31, 2023, the cycle increased to 87.92 days, indicating a slight delay in the conversion process.

The most significant change occurred by December 31, 2024, where the cash conversion cycle notably extended to 100.48 days. This increase suggests that Titan International Inc may have faced challenges in converting its investments in inventory and accounts receivable into cash within the operating cycle.

Overall, the fluctuations in the cash conversion cycle reflect variations in inventory management, accounts receivable collection, and payment of accounts payable for Titan International Inc over the five-year period. It is important for the company to strive for efficiency in these areas to optimize its cash flow operations.