Worthington Industries Inc (WOR)

Worthington Enterprises Inc.'s liquidity ratios indicate its ability to meet short-term obligations. The current ratio, which measures the company's ability to pay off short-term liabilities with short-term assets, has shown an increasing trend over the past five years, reaching 2.60 in 2023. This suggests that the company's current assets are more than sufficient to cover its current liabilities, indicating improved liquidity and financial health.

Similarly, the quick ratio, which excludes inventory from current assets, also demonstrates an increasing trend, reaching 1.75 in 2023. This indicates that Worthington Enterprises has an adequate level of highly liquid assets to cover short-term liabilities, signifying a positive liquidity position.

Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has shown a substantial increase, reaching 0.78 in 2023. This signifies a substantial improvement in the company's ability to meet its short-term obligations with readily available cash, further enhancing its liquidity position.

Overall, the liquidity ratios for Worthington Enterprises Inc. demonstrate a positive trend, indicating improved liquidity and the company's ability to meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A lower cash conversion cycle indicates more efficient operations and better management of working capital.

Looking at Worthington Enterprises Inc.'s cash conversion cycle over the past five years, we can see a fluctuating trend. In 2023, the cash conversion cycle decreased to 58.54 days from 68.45 days in 2022, indicating an improvement in the company's efficiency in managing its working capital. This decrease could be due to a reduction in the time taken to sell inventory or collect receivables, or an increase in the time taken to pay suppliers.

Comparing the latest figure to 2021 and 2020, we observe that the cash conversion cycle has improved compared to those years as well. However, it is worth noting that the lowest point was in 2019, indicating that the company's cash conversion cycle has worsened compared to that year.

In conclusion, while there has been improvement in the company's cash conversion cycle in 2023 compared to the previous two years, there is a need for careful monitoring to sustain this progress and strive for further efficiency in working capital management.