Worthington Industries Inc (WOR)
Liquidity ratios
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 3.42 | 1.88 | 1.95 | 2.60 | 2.57 | 2.43 | 2.17 | 1.92 | 1.85 | 2.33 | 2.28 | 2.50 | 2.65 | 3.03 | 3.26 | 2.53 | 2.15 | 2.13 | 2.13 | 1.67 |
| Quick ratio | 2.22 | 1.14 | 1.04 | 1.61 | 1.50 | 1.28 | 1.09 | 0.98 | 0.88 | 1.17 | 1.59 | 1.61 | 2.20 | 2.34 | 2.51 | 1.28 | 1.20 | 1.19 | 1.09 | 0.87 |
| Cash ratio | 1.12 | 0.46 | 0.23 | 0.63 | 0.40 | 0.20 | 0.05 | 0.04 | 0.04 | 0.27 | 0.76 | 0.79 | 1.37 | 1.54 | 1.73 | 0.38 | 0.21 | 0.15 | 0.09 | 0.13 |
The liquidity ratios of Worthington Industries Inc indicate the company's ability to meet its short-term obligations effectively.
The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown some fluctuation over the years. The ratio has generally been above 2, indicating a healthy liquidity position, with the highest ratio reported at 3.42 on Feb 29, 2024, and the lowest at 1.67 on Nov 30, 2019.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Worthington Industries Inc has generally maintained a quick ratio above 1, illustrating a good ability to cover its short-term obligations without relying heavily on inventory. The ratio ranged from a low of 0.87 on Nov 30, 2019, to a high of 2.51 on May 31, 2020.
The cash ratio, the most conservative liquidity ratio, focuses only on cash and cash equivalents to cover short-term liabilities. Worthington Industries Inc has demonstrated a consistent improvement in its cash ratio over the years, with the highest reported at 1.73 on May 31, 2020, and the lowest at 0.04 on Aug 31, 2022.
Overall, the liquidity ratios of Worthington Industries Inc suggest a generally strong liquidity position, with the company being able to meet its short-term obligations comfortably. However, management should continue to monitor these ratios to ensure continued liquidity stability.
Additional liquidity measure
| Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 30.67 | 75.89 | 80.88 | 68.12 | 70.37 | 60.49 | 65.05 | 68.45 | 80.39 | 91.50 | 84.72 | 73.50 | 68.92 | 52.64 | 57.18 | 63.75 | 54.11 | 56.98 | 56.51 | 59.89 |
The cash conversion cycle measures the time it takes for a company to convert its investments in inventory into cash flow from sales. Worthington Industries Inc's cash conversion cycle has shown variability over the past several quarters.
Analyzing the data from the table, we observe that the cash conversion cycle fluctuated between a low of 30.67 days to a high of 91.50 days over the past few periods. The company's cash conversion cycle was relatively stable around the mid-60s to low 70s range in the earlier periods but showed significant fluctuations in the later periods.
A shorter cash conversion cycle indicates that Worthington Industries is more efficient in managing its working capital by quickly converting its inventory into sales and then into cash. Conversely, a longer cash conversion cycle suggests inefficiencies in the company's management of inventory and collections.
It is important for Worthington Industries to monitor and analyze its cash conversion cycle regularly to identify areas for improvement in managing its working capital effectively. By optimizing inventory levels, streamlining sales processes, and improving collections, the company can potentially reduce its cash conversion cycle, leading to enhanced cash flow and profitability.