Whirlpool Corporation (WHR)

Whirlpool Corporation's liquidity ratios have shown a downward trend over the past five years based on the provided data.

1. Current Ratio: The current ratio, which measures the company's ability to meet short-term obligations, has decreased from 1.10 in 2020 to 0.72 in 2024. This indicates that Whirlpool may be facing challenges in its short-term liquidity position.

2. Quick Ratio: The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, also shows a decline from 0.72 in 2020 to 0.35 in 2024. This suggests that Whirlpool may have difficulty covering its short-term obligations with its most liquid assets.

3. Cash Ratio: The cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, has similarly decreased from 0.35 in 2020 to 0.17 in 2024. This declining trend indicates a potential strain on Whirlpool's immediate cash resources to meet its short-term liabilities.

Overall, the decreasing trend in all three liquidity ratios suggests that Whirlpool Corporation may be facing challenges in maintaining its short-term financial health and meeting its immediate obligations, which could potentially impact its operations and financial stability. Further analysis and monitoring of the company's liquidity position would be advisable to assess its ability to weather short-term financial pressures.

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Additional liquidity measure

The cash conversion cycle for Whirlpool Corporation has shown fluctuations over the years based on the provided data.

- As of December 31, 2020, the company's cash conversion cycle was 8.48 days, indicating that it took Whirlpool approximately 8.48 days to convert its investments in inventory and other resources back into cash.
- By December 31, 2021, the cash conversion cycle had improved to 2.89 days, suggesting that the company was managing its working capital more efficiently.
- However, by December 31, 2022, the cash conversion cycle increased to 7.76 days, indicating a potential slowdown in the conversion of resources to cash.
- The trend reversed by December 31, 2023, with the cash conversion cycle dropping to 2.94 days, showing improved efficiency in managing cash flows.
- Remarkably, by December 31, 2024, the cash conversion cycle reported a negative value of -3.65 days. This negative value implies that Whirlpool is able to convert its investments into cash at a faster rate than its payment obligations are due, potentially signaling effective working capital management practices.

Overall, the analysis of Whirlpool Corporation's cash conversion cycle demonstrates a mixed performance over the years, with fluctuations suggesting varying levels of efficiency in working capital management. It is crucial for the company to maintain a focus on optimizing its cash conversion cycle to ensure healthy cash flows and sustainable operations.