Advanced Drainage Systems Inc (WMS)

Liquidity ratios

Mar 31, 2025 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
Current ratio 3.33 3.21 3.19 2.89 2.96 3.03 2.88 2.78 2.69 3.13 3.07 2.78 2.23 2.22 1.98 1.95 2.33 2.39 2.48 2.82
Quick ratio 1.95 1.90 2.08 1.85 1.85 1.96 1.92 1.69 1.38 1.81 1.92 1.77 0.92 0.89 0.91 1.10 1.35 1.49 1.64 1.84
Cash ratio 1.16 1.26 1.31 1.10 1.11 1.37 1.10 0.87 0.57 1.15 1.04 0.92 0.05 0.06 0.03 0.35 0.61 0.81 0.72 0.91

Advanced Drainage Systems Inc's liquidity ratios show a strong and improving financial position over the reporting periods. The current ratio has consistently been above 1, indicating that the company has more than enough current assets to cover its current liabilities. The current ratio saw a decline in mid-2021 but then steadily improved, reaching a high of 3.33 by March 31, 2025. This signifies the company's ability to meet its short-term obligations comfortably.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows a positive trend. Although there were fluctuations, the quick ratio generally remained above 1, illustrating the company's ability to meet its short-term liabilities without relying on selling inventory. The quick ratio improved notably in the latest periods, reaching a value of 1.95 by March 31, 2025.

Furthermore, the cash ratio, which measures a company's ability to cover its current liabilities with only cash and cash equivalents, indicates a solid cash position for Advanced Drainage Systems Inc. Despite fluctuations, the cash ratio consistently remained above 1 after the initial significant drop in September 2021. This indicates that the company has enough liquid assets to cover its short-term obligations with cash alone.

In conclusion, Advanced Drainage Systems Inc's liquidity ratios demonstrate a strong financial position with improving liquidity over the reporting periods. The company has sufficient current assets, excluding inventory, and a solid cash position to meet its short-term obligations efficiently.

Additional liquidity measure

Mar 31, 2025 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
Cash conversion cycle days 93.96 88.95 88.47 92.10 85.39 72.84 79.14 88.08 83.94 79.10 86.11 89.80 94.97 98.48 95.26 77.41 80.15 74.54 85.76 93.22

The cash conversion cycle of Advanced Drainage Systems Inc has shown some fluctuations over the past few quarters, indicating varying efficiency in managing its cash flow and working capital.

From June 30, 2020, to March 31, 2021, the company managed to significantly reduce its cash conversion cycle from 93.22 days to 80.15 days, highlighting improved efficiency in converting its resources into cash. However, the cycle increased in the following quarters, reaching 98.48 days by December 31, 2021, which suggests possible challenges in managing its accounts receivable, inventory, and accounts payable during that period.

The company then managed to reduce the cycle to 79.10 days by December 31, 2022, showcasing efforts in optimizing its cash conversion process. This was followed by a fluctuating trend, showing improvements and setbacks in the subsequent quarters, with the cycle ranging between 72.84 days to 93.96 days as of March 31, 2025.

Overall, Advanced Drainage Systems Inc's cash conversion cycle demonstrates a mix of effective and challenging periods in converting its operating cycle into cash. It is essential for the company to consistently monitor and manage its working capital components to ensure smoother cash flow operations in the future.