World Kinect Corporation (WKC)

World Kinect Corp's liquidity ratios have shown a declining trend over the past five years. The current ratio, which indicates the company's ability to meet short-term obligations with current assets, decreased from 1.32 in 2019 to 1.11 in 2023. This suggests that the company may be facing challenges in managing its short-term liquidity.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also decreased from 1.13 in 2019 to 0.95 in 2023. This indicates that the company's ability to meet immediate liabilities without relying on inventory has weakened over the years.

The cash ratio, which measures the proportion of current liabilities that can be covered by cash and cash equivalents, decreased notably from 0.22 in 2019 to 0.27 in 2023. This downward trend reflects a decreasing ability to cover short-term liabilities with cash on hand.

Overall, the declining trend in World Kinect Corp's liquidity ratios raises concerns about the company's short-term financial health and ability to meet its obligations as they come due. Management should closely monitor liquidity levels and implement strategies to improve liquidity, such as better cash management and working capital optimization.

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Additional liquidity measure

The cash conversion cycle of World Kinect Corp has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its working capital. In 2019, the cash conversion cycle was at its peak at 8.13 days, gradually decreasing to 5.92 days in 2020, 4.47 days in 2021, 3.05 days in 2022, and achieving the lowest at 1.89 days in 2023.

A lower cash conversion cycle reflects that the company is efficiently converting its investments in inventory into cash receipts from sales. This trend suggests that World Kinect Corp has been able to streamline its operational processes, manage inventory levels effectively, and collect receivables in a timelier manner.

Overall, the consistent improvement in the cash conversion cycle signifies enhanced liquidity, better cash flow management, and potentially improved profitability for World Kinect Corp over the years.