Werner Enterprises Inc (WERN)

Based on the provided data, let's analyze Werner Enterprises Inc's liquidity ratios:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. A higher current ratio indicates better liquidity.
- Werner Enterprises Inc's current ratio has been improving over the years, from 1.67 in 2020 to 2.29 in 2021 and further to 2.46 in 2022, showing a strong ability to meet its short-term obligations.
- However, there was a slight decrease in the current ratio to 1.92 in 2023, which may signify a potential liquidity challenge.
- In 2024, the current ratio decreased further to 1.52, indicating a decline in the company's short-term liquidity position, potentially raising concerns about its ability to cover its current liabilities.

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.
- Werner Enterprises Inc's quick ratio has shown fluctuations over the years, with an increase from 0.11 in 2020 to 0.35 in 2022, which suggests an improvement in the company's ability to meet short-term obligations without relying on inventory.
- However, the quick ratio decreased to 0.19 in 2023 and further to 0.11 in 2024, indicating a potential decline in the company's immediate liquidity position.

3. Cash Ratio:
- The cash ratio measures the company's ability to cover its short-term liabilities with its cash and cash equivalents.
- Werner Enterprises Inc's cash ratio mirrored the trend seen in the quick ratio, with improvements from 0.11 in 2020 to 0.35 in 2022.
- Similar to the quick ratio, the cash ratio decreased to 0.19 in 2023 and 0.11 in 2024, highlighting a potential decrease in the company's ability to meet immediate obligations using cash on hand.

In conclusion, while Werner Enterprises Inc's current ratio initially showed improvement, it later declined, signaling potential concerns about its short-term liquidity position. The quick and cash ratios followed a similar trend, indicating fluctuations in the company's ability to meet short-term obligations excluding inventory. Further analysis and monitoring of liquidity trends are recommended to assess the company's financial health accurately.

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Additional liquidity measure

The cash conversion cycle of Werner Enterprises Inc has shown fluctuations over the past five years. As of December 31, 2020, the company's cash conversion cycle was at 2.30 days, indicating the number of days it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Significantly, by December 31, 2021, the cash conversion cycle had decreased to 1.80 days, reflecting an improvement in the company's efficiency in managing its working capital. However, there was a slight increase in the cash conversion cycle by December 31, 2022, to 1.92 days.

The trend reversed slightly by December 31, 2023, as the cash conversion cycle increased to 2.31 days, implying the company took longer to convert its assets into cash during that period. Thankfully, by December 31, 2024, the cash conversion cycle reverted back to 1.92 days.

Overall, Werner Enterprises Inc has shown some variability in its cash conversion cycle over the years, with fluctuations that may be influenced by factors such as inventory management, accounts receivable collection, and accounts payable payment policies. It is essential for the company to monitor and manage its cash conversion cycle effectively to maintain healthy liquidity and operational efficiency.