Worthington Steel Inc (WS)

The liquidity ratios of Worthington Steel Inc. over the reported periods demonstrate several key trends. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, exhibited an initial stability, maintaining a value of 2.05 through February and May 2023. However, there was a notable decline in August 2023, dropping to 1.73, indicative of a decrease in liquidity position. Subsequently, the current ratio experienced fluctuations, increasing marginally to 1.83 in November 2023, but then declining again to 1.58 by February 2024. There was a slow recovery noted, with the ratio reaching 1.71 in August 2024 and back to 1.83 in November 2024. The final recorded period in May 2025 shows a significant decrease to a very low level of 0.00, suggesting potential issues with liquidity or possibly an anomaly or data error.

The quick ratio, which excludes inventory from current assets to focus on the most liquid assets, followed a similar decreasing trend from 1.06 on February 28, 2023, to a low of 0.86 in August 2023. It then showed some recovery, reaching 1.08 in November 2023 and stabilizing around 0.83 to 0.93 in the subsequent periods. These ratios indicate that the company's ability to meet short-term obligations with its liquid assets remains relatively stable but slightly strained over time, with variability in its liquidity cushion.

The cash ratio, representing the most conservative measure of liquidity by focusing solely on cash and cash equivalents, shows a significant decline from 0.07 in February and May 2023. It dips to a low of 0.04 in August 2023 but then notably increases to 0.36 in November 2023. Thereafter, the ratio remains relatively low but stable, fluctuating between 0.06 and 0.12. The sharp rise in November 2023 suggests an improvement in cash holdings during that period, although it remains a limited proportion of immediate liquidity.

Overall, the analysis points toward a trend of decreasing liquidity over the period, with some intermittent improvements. The ratios suggest that Worthington Steel Inc. has faced challenges maintaining high levels of liquid assets relative to its short-term liabilities, especially towards the most recent periods where metrics approach critical levels. The substantial decline in the May 2025 data warrants further investigation to clarify whether it reflects actual liquidity issues or data discrepancies.

---

Additional liquidity measure

The analysis of Worthington Steel Inc.'s cash conversion cycle (CCC) over the specified periods reveals notable fluctuations and trends. As of February 28, 2023, the CCC stood at approximately 46.70 days, indicating the duration it takes for the company to convert its investments in inventory and receivables into cash, net of its payables.

Throughout 2023, the CCC experienced an upward trend, reaching a peak of approximately 59.55 days by August 31, 2023. This increase suggests a lengthening in the time required to convert inventory and receivables into cash, potentially attributable to slower receivables collection, extended inventory cycles, or changes in supplier payment terms. However, the CCC subsequently declined to around 49.35 days by November 30, 2023, signaling a partial improvement in cash conversion efficiency.

Moving into 2024, the CCC maintained relative stability, with values around 50.98 days in February and slightly increasing to 53.75 days by May. The period from May to August 2024 saw a marginal decrease to approximately 53.07 days, indicating a slight improvement in working capital efficiency. The subsequent period, marked by November 30, 2024, after which the data extends into early 2025, indicates the CCC remains near the 50-day mark, specifically 49.74 days in November 2024.

An unusual and notable data point appears on May 31, 2025, with a computed CCC of -54.32 days. A negative CCC suggests the company is significantly ahead in its cash conversion process, possibly due to favorable payment terms, rapid collection from receivables compared to inventory and payables cycles, or the effect of one-time adjustments. This shift indicates an exceptionally efficient cash cycle, contrasting sharply with prior periods.

Overall, the trend shows fluctuations within a relatively narrow range from around 46.70 days to approximately 59.55 days, reflecting varying operational efficiencies and working capital management practices over the analyzed periods. The transition to a negative CCC in 2025 could warrant further investigation to understand underlying causes, such as changes in credit policies, supplier terms, or accounting adjustments, which may considerably impact liquidity and operational liquidity planning.