Warner Music Group (WMG)
Liquidity ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.68 | 0.68 | 0.64 | 0.60 | 0.62 |
| Quick ratio | 0.50 | 0.50 | 0.47 | 0.30 | 0.49 |
| Cash ratio | 0.18 | 0.18 | 0.17 | 0.03 | 0.20 |
Warner Music Group's liquidity ratios have fluctuated over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has remained relatively consistent around 0.60 to 0.68, indicating a consistent but moderate level of liquidity.
The quick ratio, which excludes inventory from current assets to provide a more conservative measure of liquidity, has also shown stability around 0.30 to 0.50. This suggests that the company may have some difficulty covering its short-term obligations without relying on inventory.
The cash ratio, which focuses solely on cash and cash equivalents to evaluate immediate liquidity, has fluctuated between 0.03 and 0.20. While the ratio has shown some improvement over the years, Warner Music Group's ability to cover its current liabilities with cash alone remains limited.
Overall, Warner Music Group's liquidity ratios indicate a moderate level of liquidity, with some room for improvement in terms of maintaining higher levels of cash reserves to cover short-term obligations. Management may need to continue monitoring and managing liquidity effectively to ensure the company's financial stability.
Additional liquidity measure
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 59.38 | 57.53 | 47.77 | 42.25 | 48.66 |
Warner Music Group's cash conversion cycle has shown fluctuations over the past five years. In 2024, the cash conversion cycle increased to 59.38 days from 57.53 days in 2023. This indicates that it took Warner Music Group slightly longer to convert its investments in inventory and accounts receivable into cash in 2024 compared to the previous year.
Looking back, the cash conversion cycle was relatively stable in 2022 at 47.77 days but showed a significant improvement in 2021, decreasing to 42.25 days. However, there was a slight increase again in 2020 to 48.66 days.
Overall, Warner Music Group's cash conversion cycle has shown some variability, with some years performing better than others. It is essential for the company to continue monitoring and managing its working capital efficiently to ensure optimal liquidity and operational performance.