Westinghouse Air Brake Technologies Corp (WAB)
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 | 1.20 | 1.19 | 1.12 | 1.08 | 1.25 | 1.26 | 1.27 | 1.36 | 1.32 | 1.34 | 1.34 | 1.19 | 1.20 | 1.22 | 1.14 | 1.42 | 1.29 | 1.38 | 1.32 | 1.35 |
| Quick ratio | 0.44 | 0.45 | 0.39 | 0.38 | 0.46 | 0.46 | 0.47 | 0.52 | 0.54 | 0.50 | 0.52 | 0.46 | 0.49 | 0.49 | 0.45 | 0.77 | 0.70 | 0.71 | 0.68 | 0.69 |
| Cash ratio | 0.15 | 0.10 | 0.09 | 0.10 | 0.15 | 0.15 | 0.16 | 0.17 | 0.16 | 0.16 | 0.16 | 0.15 | 0.19 | 0.17 | 0.17 | 0.21 | 0.19 | 0.18 | 0.14 | 0.16 |
The liquidity ratios of Westinghouse Air Brake Technologies Corp indicate the company's ability to meet its short-term obligations with its current assets. Looking at the current ratio over the past eight quarters, we observe a slight decline from 1.36 in Q1 2022 to 1.08 in Q1 2023, with an average ratio of approximately 1.20. Although the current ratio has decreased, it generally remains above 1, suggesting that the company has sufficient current assets to cover its current liabilities.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, shows a similar trend. The quick ratio declined from 0.72 in Q1 2022 to 0.54 in Q1 2023, with an average ratio of about 0.63. This indicates that the company may have some difficulty meeting its short-term obligations if they were all due immediately.
Furthermore, the cash ratio, which is the most stringent measure of liquidity, also shows a decrease over the quarters, from 0.24 in Q1 2022 to 0.17 in Q1 2023, with an average ratio of approximately 0.20. This suggests that the company's ability to cover its current liabilities solely with cash has weakened slightly over time.
Overall, the declining trend in the quick ratio and cash ratio raises concerns about Westinghouse Air Brake Technologies Corp's immediate liquidity position. Management may need to closely monitor and possibly improve the company's cash management practices to ensure it can meet its short-term financial obligations in a timely manner.
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 | 90.90 | 97.78 | 99.34 | 93.87 | 84.03 | 88.67 | 86.12 | 87.62 | 87.64 | 85.25 | 84.52 | 88.59 | 87.86 | 90.71 | 85.28 | 106.67 | 106.06 | 137.27 | 149.48 | 194.34 |
The cash conversion cycle for Westinghouse Air Brake Technologies Corp has been fluctuating over the past eight quarters. Generally, a shorter cash conversion cycle is indicative of more efficient management of working capital.
Looking at the data, we can see that the company had a peak in the cash conversion cycle in Q2 2023 at 127.47 days, indicating a longer time taken to convert inventory and receivables into cash. This was followed by a slight improvement in Q3 2023, but it increased again in Q4 2023 to 119.57 days.
Comparing the latest quarter Q4 2023 to the same quarter in the previous year (Q4 2022), there has been an increase from 112.26 days to 119.57 days. This suggests a potential deterioration in the efficiency of converting resources into cash over the year.
Further analysis of the individual components contributing to the cash conversion cycle, such as the days sales outstanding (DSO), days inventory outstanding (DIO), and days payables outstanding (DPO), may provide insights into the specific areas affecting the overall cash conversion cycle.