Waste Management Inc (WM)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.76 | 0.89 | 1.07 | 0.89 | 0.90 | 0.84 | 0.82 | 0.87 | 0.81 | 0.85 | 1.07 | 0.80 | 0.75 | 0.78 | 0.88 | 1.01 | 1.00 | 1.20 | 0.88 | 1.84 |
| Quick ratio | 0.66 | 0.78 | 0.95 | 0.76 | 0.79 | 0.73 | 0.70 | 0.74 | 0.71 | 0.73 | 0.96 | 0.69 | 0.65 | 0.78 | 0.87 | 1.01 | 0.98 | 1.19 | 0.83 | 1.89 |
| Cash ratio | 0.07 | 0.13 | 0.23 | 0.08 | 0.11 | 0.04 | 0.03 | 0.07 | 0.08 | 0.04 | 0.24 | 0.04 | 0.03 | 0.13 | 0.15 | 0.27 | 0.24 | 0.40 | 0.46 | 1.02 |
The liquidity ratios of Waste Management Inc indicate the company's ability to meet its short-term obligations.
1. Current Ratio: The current ratio measures the company's ability to pay its short-term liabilities with its current assets. Waste Management Inc's current ratio has been fluctuating between 0.75 to 1.84 over the past five years, with a decreasing trend. A ratio below 1 suggests that the company may have difficulty meeting its short-term obligations.
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. Waste Management Inc's quick ratio has varied between 0.65 to 1.89 during the same period, displaying a similar declining trend as the current ratio. A quick ratio below 1 indicates that the company may struggle to meet its immediate obligations.
3. Cash Ratio: The cash ratio is the most conservative liquidity measure, focusing solely on cash and cash equivalents to cover short-term liabilities. Waste Management Inc's cash ratio has ranged from 0.03 to 1.02, demonstrating a significant fluctuation. A low cash ratio indicates potential liquidity issues, as the company may not have enough cash on hand to meet its short-term obligations.
Overall, Waste Management Inc's liquidity ratios suggest a weakening liquidity position over the past few years, with decreasing trends in both current and quick ratios. The cash ratio also indicates variability in the company's ability to cover short-term liabilities with cash and cash equivalents. Management should closely monitor these liquidity metrics and take appropriate actions to strengthen the company's short-term financial position.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 19.01 | 15.47 | 14.88 | 14.12 | 15.40 | 15.10 | 16.71 | 15.34 | 11.65 | 17.31 | 20.38 | 17.48 | 19.29 | 20.46 | 23.15 | 24.48 | 33.16 | 19.95 | 16.19 | 23.67 |
The cash conversion cycle of Waste Management Inc has shown some fluctuations over the period from March 31, 2020, to December 31, 2024. The cash conversion cycle measures the time taken by a company to convert its investments in inventory and other resources into cash inflows from sales.
The trend of the cash conversion cycle for Waste Management Inc indicates varying efficiency in managing its working capital and operations. From March 31, 2020, to December 31, 2024, the company's cash conversion cycle has ranged from a low of 11.65 days on December 31, 2022, to a high of 33.16 days on December 31, 2020.
Generally, a shorter cash conversion cycle is considered favorable as it implies that the company is able to quickly convert its investments into cash. A longer cash conversion cycle may signal inefficiencies in managing inventory, collecting receivables, or paying suppliers.
In the case of Waste Management Inc, the company has shown improvements in managing its cash conversion cycle over the period, with a decreasing trend from 2020 to 2024. This improvement suggests that the company has become more efficient in managing its working capital and operations, translating into quicker cash inflows from its sales activities.
Overall, a declining trend in the cash conversion cycle is a positive indicator of the company's operational efficiency and effective working capital management.