Werner Enterprises Inc (WERN)

Werner Enterprises, Inc. liquidity ratios exhibit varying trends over the past five years. The current ratio, which measures the company's ability to pay off short-term liabilities with its current assets, has shown fluctuations. It was highest in 2022 at 2.46 and lowest in 2019 at 1.51. A higher current ratio indicates a stronger ability to cover short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Werner Enterprises' quick ratio has followed a similar pattern to the current ratio, with the highest value in 2022 at 2.42 and the lowest in 2019 at 1.48. The company has consistently maintained quick ratios above 1, suggesting a solid ability to meet short-term obligations even without relying on inventory liquidation.

The cash ratio, which indicates the company's ability to cover short-term liabilities with cash and cash equivalents alone, has also displayed fluctuations. The cash ratio for Werner Enterprises was highest in 2022 at 0.64 and lowest in 2019 at 0.27. A higher cash ratio is usually preferred as it signifies a stronger ability to settle immediate debts using only cash on hand.

Overall, the liquidity ratios of Werner Enterprises, Inc. reflect a generally healthy financial position, as indicated by consistently above-average current, quick, and cash ratios in recent years. However, a potential concern may be the downward trend in these ratios from 2022 to 2023, suggesting a need for the company to carefully manage its liquidity position to ensure continued ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Werner Enterprises, Inc. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle improved to 52.29 days from 60.87 days in 2022. This indicates that the company was able to convert its investments in inventory and accounts receivable into cash more efficiently in 2023 compared to the prior year.

Looking back further, the cash conversion cycle was 64.74 days in 2021, indicating a slight improvement in efficiency from the previous year but still higher than the most recent year. In 2020 and 2019, the company's cash conversion cycles were 56.10 days and 55.57 days, respectively, showing consistent performance in managing its cash conversion cycle during those years.

Overall, the trend in Werner Enterprises' cash conversion cycle shows that the company has made efforts to optimize its working capital management, resulting in a shorter cash conversion cycle in 2023. This trend suggests that the company may have improved its inventory turnover, accounts receivable collection, or payment of accounts payable processes, ultimately leading to better cash flow efficiency.