Titan International Inc (TWI)

The liquidity ratios of Titan International, Inc. over the past five years demonstrate the company's ability to meet its short-term obligations.

The current ratio has shown a positive trend, increasing from 1.97 in 2019 to 2.35 in 2023. This ratio indicates that Titan International had $2.35 in current assets for every $1 in current liabilities by the end of 2023, suggesting improved liquidity and a stronger ability to cover short-term obligations.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also exhibited an upward trend. It rose from 0.95 in 2019 to 1.37 in 2023. This shows that the company has enough liquid assets to cover its immediate liabilities without relying on selling inventory.

The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents, has also been increasing steadily. From 0.38 in 2019, it reached 0.78 in 2023. This implies that Titan International has been expanding its ability to cover its short-term liabilities with its readily available cash resources.

Overall, the increasing trend in all three liquidity ratios indicates that Titan International has been effectively managing its liquidity position over the years. Despite some fluctuations, the company has shown a consistent improvement in its ability to meet its short-term financial obligations, which reflects positively on its financial health and operational efficiency.

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Additional liquidity measure

The cash conversion cycle of Titan International, Inc. has shown variability over the past five years. In 2020, the company had a relatively long cash conversion cycle of 96.94 days, indicating that it took the company almost 97 days to convert its investments in inventory and other resources into cash inflows from sales. However, in the subsequent years, the company managed to improve its efficiency in this aspect, as evidenced by the decreasing trend in the cash conversion cycle.

By the end of 2023, Titan International had reduced its cash conversion cycle to 83.62 days. This reduction suggests that the company was able to streamline its operations, potentially by managing its inventories more effectively, collecting receivables more efficiently, and extending payables strategically. A shorter cash conversion cycle is generally favorable as it indicates that the company is able to generate cash more quickly from its operating activities.

Overall, the improving trend in Titan International's cash conversion cycle over the past five years indicates enhanced operational efficiency and effective working capital management, which can contribute to the company's financial health and sustainability. It is important for the company to continue monitoring and optimizing its cash conversion cycle to ensure ongoing operational effectiveness.