West Pharmaceutical Services Inc (WST)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 2.88 | 3.70 | 3.66 | 3.62 | 3.70 | 3.80 | 3.13 | 2.89 | 2.93 | 2.86 | 3.13 | 2.75 | 2.73 | 2.77 | 2.96 | 2.84 | 3.10 | 3.00 | 3.02 | 2.88 |
| Quick ratio | 2.03 | 2.66 | 2.60 | 2.62 | 2.70 | 2.66 | 2.21 | 1.99 | 2.11 | 2.47 | 2.68 | 2.40 | 2.41 | 2.46 | 2.10 | 1.94 | 2.22 | 2.13 | 2.10 | 1.94 |
| Cash ratio | 1.27 | 1.68 | 1.56 | 1.66 | 1.72 | 1.60 | 1.27 | 1.14 | 1.28 | 1.62 | 1.67 | 1.44 | 1.65 | 1.63 | 1.19 | 0.97 | 1.29 | 1.18 | 1.04 | 0.88 |
West Pharmaceutical Services, Inc. has demonstrated consistent liquidity strength over the past eight quarters based on its liquidity ratios. The current ratio has shown a slight decline from Q3 2022 to Q4 2023 but remains at healthy levels ranging from 2.88 to 3.70. This indicates that the company has more than enough current assets to cover its current liabilities in the short term.
The quick ratio has also maintained a stable trend over the same period, ranging from 2.18 to 2.90. This ratio accounts for the most liquid current assets, excluding inventory, and suggests that West Pharmaceutical Services, Inc. can meet its short-term obligations comfortably without relying on selling inventory.
The cash ratio of the company has also remained strong, fluctuating between 1.33 and 1.92. This ratio specifically focuses on the most liquid current assets, which are cash and cash equivalents, and indicates that West Pharmaceutical Services, Inc. has a sufficient level of cash to cover its current liabilities in the short term.
Overall, West Pharmaceutical Services, Inc. has maintained a solid liquidity position with consistent current ratios above 2.0, quick ratios above 1.0, and cash ratios above 1.0 over the past eight quarters. This indicates that the company has the ability to meet its short-term financial obligations efficiently and may have a strong financial foundation to support its operations and growth strategies.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 97.23 | 103.50 | 110.61 | 104.49 | 101.28 | 101.01 | 100.60 | 94.14 | 90.43 | 93.58 | 98.25 | 96.07 | 90.06 | 95.13 | 94.16 | 91.31 | 86.68 | 90.15 | 92.83 | 93.72 |
The cash conversion cycle of West Pharmaceutical Services, Inc. has shown some fluctuation over the past eight quarters. The cycle measures the time it takes for the company to convert its resources (inventory and accounts receivable) into cash, indicating its efficiency in managing working capital.
Analyzing the data provided, we observe that the cash conversion cycle ranged from a low of 99.48 days in Q1 2022 to a high of 115.69 days in Q2 2023. Generally, a shorter cash conversion cycle is considered more favorable as it suggests that the company is able to quickly turn its investments into cash.
The company experienced an increase in the cash conversion cycle in Q2 and Q3 of 2023 compared to the previous quarters, indicating a potential slowdown in the conversion of resources to cash during that period. However, it slightly improved in Q4 2023.
Overall, a thorough analysis of the cash conversion cycle trends can provide insights into the company's efficiency in managing its working capital and liquidity, which are crucial aspects of its financial health and operational performance.