Worthington Industries Inc (WOR)

The liquidity ratios of Worthington Industries Inc. over the specified period demonstrate notable fluctuations and trends in the company's short-term financial health.

Starting with the current ratio, which measures the company's ability to meet its short-term obligations with its current assets, there has been an initial decline from 2.50 on May 31, 2021, to 1.92 on May 31, 2022. Subsequently, the current ratio improved significantly, reaching 2.60 on May 31, 2023, and continuing to strengthen to 3.78 on May 31, 2024. Although it declined slightly to 3.48 on May 31, 2025, the ratio remains comfortably above the generally accepted threshold of 1.0, indicating a solid liquidity position.

The quick ratio, which excludes inventory from current assets to evaluate immediate liquidity, exhibited a substantial decrease from 1.92 in 2021 to 0.98 in 2022, signaling a reduction in readily available liquid assets. After this dip, the quick ratio stabilized around 0.95 in 2023, then sharply increased to 2.59 in 2024, and remained strong at 2.43 in 2025. The sharp rebound indicates an improvement in the company's ability to meet short-term liabilities using its most liquid assets.

The cash ratio, representing the most conservative measure of liquidity by comparing cash and cash equivalents to current liabilities, initially stood at 1.11 in 2021. It then plummeted to 0.04 in 2022, reflecting a significant reduction in cash holdings relative to liabilities. However, subsequent periods show a recovery to 0.63 in 2023, and further increases to 1.37 in 2024 and 1.27 in 2025. These figures suggest that the company's cash liquidity position has improved substantially after the dip in 2022, restoring a position where cash alone can cover a considerable portion of current liabilities.

Overall, the liquidity ratios suggest that Worthington Industries Inc. experienced a temporary weakening in liquidity during 2022 but recovered strongly in the subsequent years. The upward trend in the current and cash ratios in 2024 and 2025 indicates a robust liquidity position, capable of comfortably meeting short-term obligations with both total liquid assets and cash. The stabilization of these ratios at elevated levels underscores the company's enhanced liquidity management and financial resilience in recent periods.

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Additional liquidity measure

The cash conversion cycle (CCC) of Worthington Industries Inc. exhibits notable fluctuations over the period from May 31, 2021, to May 31, 2025. As of May 31, 2021, the CCC was recorded at approximately 78.06 days. This figure decreased significantly over the following year, reaching roughly 68.45 days by May 31, 2022, and further declining to approximately 57.97 days by May 31, 2023. The downward trend during this period suggests an improvement in operational efficiency, with the company increasing the speed at which it converts its investments in inventory and receivables into cash.

However, the subsequent period shows a reversal of this trend. By May 31, 2024, the CCC increased to about 91.89 days, indicating a lengthening of the cycle and a potential slowdown in cash conversion efficiency. This upward movement continues into May 31, 2025, with the cycle extending further to approximately 101.24 days. Such an increase suggests that the firm may be experiencing delays in collecting receivables, holding inventory longer, or a combination of both, which could be attributable to changes in market conditions, operational challenges, or strategic adjustments.

Overall, the data reflects a pattern of initial improvement in the company's cash conversion cycle, followed by a reversal to a longer cycle duration. This shift has implications for liquidity management and working capital efficiency, emphasizing the need for continuous monitoring of receivables, inventory turnover, and payables management to sustain operational and financial health.