Worthington Industries Inc (WOR)

Based on the provided data, we can analyze Worthington Industries Inc's liquidity ratios as follows:

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets. Worthington Industries Inc's current ratio fluctuated over the periods, ranging from a low of 1.85 on February 28, 2022, to a high of 3.78 on May 31, 2024.
- Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities. Worthington Industries Inc maintained a current ratio above 1 throughout the periods, suggesting a healthy liquidity position. However, the ratio decreased from 3.42 on February 29, 2024, to 3.51 on February 28, 2025.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Worthington Industries Inc's quick ratio fluctuated significantly over the periods, ranging from a low of 0.04 on February 28, 2022, to a high of 1.37 on May 31, 2024.
- A quick ratio above 1 indicates that the company can meet its short-term obligations without relying on selling its inventory. Worthington Industries Inc's quick ratio was below 1 for most periods, indicating a lower level of liquidity compared to the current ratio.

3. Cash Ratio:
- The cash ratio is the most conservative measure of liquidity as it only considers cash and cash equivalents to cover current liabilities. Worthington Industries Inc's cash ratio showed similar trends to the quick ratio, with values ranging from 0.04 to 1.37 over the periods.
- A cash ratio of 1 or higher suggests that the company can cover its current liabilities solely with cash on hand. Worthington Industries Inc's cash ratio was generally below 1, indicating a reliance on other current assets to meet short-term obligations.

In summary, Worthington Industries Inc maintained a current ratio above 1, indicating good liquidity throughout the periods analyzed. However, the quick ratio and cash ratio were generally lower, indicating a potential dependency on inventory and other current assets to meet short-term obligations. It is essential for the company to maintain a balanced liquidity position to ensure it can meet its financial obligations efficiently.

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Additional liquidity measure

The cash conversion cycle of Worthington Industries Inc has fluctuated over the past few years. On average, the company takes around 60 days to convert its investments in inventory into cash receipts from customers. The cycle peaked at 95.61 days on August 31, 2021, indicating a longer period to convert inventory to cash, which could potentially strain liquidity. However, the cycle decreased to 21.94 days on February 29, 2024, reflecting an efficient management of inventory and collections, leading to a faster conversion of assets into cash.

Overall, it is important for Worthington Industries Inc to closely monitor and manage its cash conversion cycle to ensure optimal operating efficiency and cash flow management. A shorter cash conversion cycle generally indicates that the company is efficient in managing its working capital and converting its assets into cash, which is a positive sign for investors and stakeholders.