Watts Water Technologies Inc (WTS)

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 2.61 2.74 2.53 2.56 2.51 2.48 2.30 2.27 2.11 2.07 2.13 2.24 2.27 2.37 2.39 2.09 1.75 1.80 1.86 2.27
Quick ratio 1.50 1.64 1.40 1.48 1.45 1.27 1.18 1.21 1.13 1.15 1.26 1.34 1.33 1.35 1.28 1.27 1.05 1.04 1.08 1.28
Cash ratio 0.86 0.96 0.73 0.79 0.83 0.59 0.55 0.56 0.59 0.57 0.61 0.65 0.70 0.64 0.53 0.65 0.52 0.44 0.43 0.53

The liquidity ratios of Watts Water Technologies, Inc. provide valuable insights into the company's ability to meet its short-term obligations.

Starting with the current ratio, it remained relatively stable throughout the quarters in 2023, ranging from 2.53 to 2.74. This indicates that the company has a comfortable cushion of current assets to cover its current liabilities, with the highest ratio in Q3 2023. The consistent current ratio above 2 suggests healthy liquidity levels and the ability to handle short-term financial obligations.

Moving on to the quick ratio, which excludes inventory from current assets, we see a similar trend of stability, though at slightly lower levels compared to the current ratio. The quick ratio ranged from 1.27 to 1.72 in 2023, peaking in Q3 2023. This ratio provides a more conservative measure of liquidity as it excludes inventory, indicating the company's ability to meet short-term obligations with its most liquid assets.

Lastly, the cash ratio, which is the most conservative liquidity measure, also showed a steady pattern in 2023. The ratio ranged from 0.63 to 1.05, with the lowest value in Q2 2022 and the highest in Q3 2023. This ratio reflects the proportion of current liabilities that can be covered by cash and cash equivalents alone, highlighting the company's ability to pay off its immediate obligations with cash on hand.

Overall, the liquidity ratios demonstrate that Watts Water Technologies, Inc. maintains a strong liquidity position, with consistently healthy current, quick, and cash ratios throughout the quarters analyzed in 2023. This suggests the company is well-prepared to meet its short-term financial commitments and indicates a sound financial health in terms of liquidity management.

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 103.01 104.28 108.40 104.14 95.67 112.40 110.10 106.73 97.07 99.41 95.68 93.80 89.89 97.99 99.28 96.34 88.20 100.30 89.92 91.39

The cash conversion cycle of Watts Water Technologies, Inc. has shown some fluctuations over the past eight quarters. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From Q1 2022 to Q2 2023, there was a gradual increase in the cash conversion cycle, reaching a peak of 140.05 days in Q2 2023. This suggests that the company took longer to convert its investments into sales and ultimately into cash during this period.

The longest cash conversion cycle was observed in Q3 2022 at 144.94 days, indicating that the company faced challenges in managing its working capital efficiently during that quarter.

On the other hand, the shortest cycle was in Q4 2022 at 122.80 days, showing that the company was more effective in converting its investments into cash during that period.

Overall, fluctuations in the cash conversion cycle of Watts Water Technologies, Inc. indicate varying levels of efficiency in managing its working capital and converting investments into cash. Investors and stakeholders would need to monitor these trends closely to assess the company's operational and financial performance.