Westlake Chemical Corporation (WLK)

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 2.37 2.54 2.95 2.85 2.60 2.48 2.39 2.12 2.25 3.39 2.99 2.82 2.56 2.78 2.85 3.68 2.21 2.81 2.07 2.14
Quick ratio 1.89 1.88 2.13 1.97 1.75 1.61 1.53 1.34 1.61 3.28 2.96 2.83 2.64 2.92 2.05 2.74 1.42 2.04 1.29 1.28
Cash ratio 1.31 1.15 1.26 1.12 0.97 0.72 0.52 0.41 0.81 2.41 1.92 1.83 1.75 1.86 1.00 1.50 0.59 1.16 0.33 0.36

Westlake Corporation's liquidity ratios have shown varying trends over the past eight quarters. The current ratio, which measures the company's ability to cover its short-term obligations with current assets, has generally been above 2, indicating a healthy liquidity position. The ratio peaked at 2.95 in Q2 2023, suggesting a strong ability to meet short-term liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also demonstrated a favorable trend, with values consistently above 1.5. This indicates that Westlake has a strong ability to meet its immediate financial obligations without relying on inventory liquidation.

On the other hand, the cash ratio, which assesses the company's ability to cover current liabilities with cash and cash equivalents, has shown a more modest improvement. The ratio has been gradually increasing from 0.46 in Q1 2022 to 1.21 in Q4 2023, demonstrating the company's enhanced capacity to meet short-term obligations solely with cash on hand.

Overall, Westlake Corporation's liquidity ratios reflect a robust financial position, with consistent improvements in its ability to meet short-term obligations using various liquidity measures. These trends suggest that the company has efficient cash management practices in place to ensure financial stability and flexibility.

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 72.90 84.47 77.46 76.52 72.05 82.73 92.48 98.03 81.16 78.27 77.54 80.32 80.56 85.13 78.24 84.61 71.22 70.31 74.00 73.60

The cash conversion cycle of Westlake Corporation has exhibited fluctuations over the past eight quarters. In Q1 2022, the company had a relatively high cash conversion cycle of 98.31 days, indicating that it took a longer time to convert its investments in inventory and other resources into cash. Subsequently, the cash conversion cycle decreased in Q2 2022 and Q3 2022, suggesting an improvement in the company's efficiency in managing its working capital.

However, in Q4 2022, the cycle increased again to 72.05 days, indicating a potential delay in the conversion of resources into cash. This trend continued into Q1 2023, with a slight increase in the cash conversion cycle to 76.58 days.

In Q2 2023, there was a notable decrease in the cash conversion cycle to 77.56 days, which was followed by a further reduction in Q3 2023 to 84.58 days. However, in Q4 2023, the cycle increased again to 72.90 days.

Overall, the fluctuation in Westlake Corporation's cash conversion cycle suggests variability in its efficiency in managing working capital and converting investments into cash. The company should continue to monitor and analyze its cash conversion cycle to identify areas for improvement and maintain healthy liquidity levels.