Williams Companies Inc (WMB)

The liquidity ratios of Williams Cos Inc, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.

The current ratio, which indicates the company's ability to cover its current liabilities with its current assets, has shown a fluctuating trend over the past five years. It decreased from 0.40 in 2019 to 0.77 in 2023, indicating a slight improvement in liquidity. However, the ratio still remains below 1.0, suggesting a potential concern regarding the company's short-term liquidity position.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also exhibited a similar trend, increasing from 0.37 in 2019 to 0.73 in 2023. Despite this improvement, the quick ratio remains below 1.0, signaling that the company may struggle to meet its obligations without relying on inventory.

The cash ratio reflects the proportion of cash and cash equivalents to cover current liabilities, providing a conservative measure of liquidity. Williams Cos Inc's cash ratio has varied over the years, reaching its highest level of 0.44 in 2023. This indicates that the company has increased its ability to cover its short-term obligations with available cash reserves.

Overall, while there have been improvements in the liquidity ratios of Williams Cos Inc over the past five years, the current and quick ratios below 1.0 suggest that the company may still face challenges in meeting its short-term financial commitments. Monitoring these ratios closely will be crucial for assessing the company's liquidity position and financial health.

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Additional liquidity measure

The cash conversion cycle of Williams Cos Inc has shown fluctuating trends over the past five years. In 2023, the company's cash conversion cycle was -158.69 days, indicating that it takes approximately 158.69 days for the company to convert its investments in inventory and receivables into cash. This value represents an improvement compared to the previous year, where the cash conversion cycle was -126.80 days.

Looking further back, in 2021, the cash conversion cycle was -58.99 days, representing a shorter conversion period than in 2020 and 2019, where the values were -34.50 days and -35.15 days, respectively. It is worth noting that negative values for the cash conversion cycle suggest that Williams Cos Inc is efficiently managing its working capital, meaning the company is able to collect cash from customers faster than it pays its suppliers and vendors.

The increase in the cash conversion cycle from 2021 to 2023 could be attributed to changes in the company's operations, such as inventory management practices, sales terms, or collection policies. Overall, Williams Cos Inc has shown a generally strong ability to convert its investments into cash efficiently, as evidenced by the consistently negative cash conversion cycle values over the past five years.