Advanced Drainage Systems Inc (WMS)

Liquidity ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019
Current ratio 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 2.80 2.37 2.34 1.97
Quick ratio 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 1.57 1.15 1.26 0.99
Cash ratio 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 0.73 0.44 0.22 0.04

Over the past several quarters, Advanced Drainage Systems Inc has generally maintained a strong current ratio, which indicates a healthy level of liquidity and ability to cover short-term obligations with its current assets. The company's current ratio ranged from 2.23 to 3.13, with a peak at the end of 2022. However, there was a slight decline in the most recent quarter, ending March 31, 2024.

In terms of the quick ratio, Advanced Drainage Systems Inc also exhibited a relatively stable trend, although at lower levels compared to the current ratio. The quick ratio ranged from 0.89 to 1.96, indicating a slightly more conservative measure of liquidity that excludes inventory from current assets. Similarly, the company's cash ratio, which provides an even stricter view of liquidity by considering only cash and cash equivalents, has shown variability but generally remained above 1 in recent quarters.

Overall, the liquidity ratios of Advanced Drainage Systems Inc suggest the company has maintained a solid liquidity position in the short term, with the current and quick ratios indicating the ability to meet current obligations comfortably. However, it is important to monitor any fluctuations in these ratios to ensure continued stability in the company's liquidity position.

Additional liquidity measure

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019
Cash conversion cycle days 429.48 414.21 374.20 524.24 577.73 528.48 484.66 480.79 639.67 259.13 196.65 138.39 157.78 148.91 147.77 173.79 205.48 156.18 126.27 103.45

The cash conversion cycle of Advanced Drainage Systems Inc has exhibited fluctuations over the past few quarters. It is calculated by adding the Days Inventory Outstanding (DIO), Days Sales Outstanding (DSO), and Days Payable Outstanding (DPO) together. A longer cash conversion cycle indicates the company is taking longer to convert its investments in inventory and accounts receivable into cash from sales.

The cash conversion cycle reached its peak at 639.67 days on Mar 31, 2022, which was notably higher compared to the quarterly average. This increase was primarily driven by a significant increase in days inventory outstanding and/or days sales outstanding, coupled with a slower collection of receivables or a longer payment period to suppliers.

During the subsequent quarters, the company managed to reduce its cash conversion cycle, reaching a low of 103.45 days on Jun 30, 2019. This improvement may suggest more efficient management of inventory levels, quicker collection of receivables, or a more effective payment strategy towards suppliers.

Overall, fluctuations in the cash conversion cycle could reflect changes in the company's operational efficiency, liquidity management, and relationships with customers and suppliers. It is important for Advanced Drainage Systems Inc to monitor and optimize its cash conversion cycle to ensure effective working capital management and sustainable financial performance.