Woodward Inc (WWD)

Woodward Inc's liquidity ratios have shown varying trends over the past five years.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term obligations with its current assets. Woodward Inc's current ratio has been fluctuating, ranging from a low of 1.89 in 2024 to a high of 4.00 in 2021.
- A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered healthy. However, a significant decrease from 2021 to 2024 may indicate a potential liquidity concern.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Woodward Inc's quick ratio has also fluctuated over the years, ranging from 0.82 in 2024 to 2.13 in 2021.
- A quick ratio above 1 indicates that the company can meet its short-term obligations without relying on inventory sales. The decreasing trend from 2021 to 2024 suggests a potential decrease in the company's ability to quickly cover its liabilities.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity ratio, measuring the company's ability to cover its current liabilities with its cash and cash equivalents. Woodward Inc's cash ratio has shown significant variations, ranging from 0.20 in 2022 to 1.22 in 2021.
- A higher cash ratio is generally preferred as it indicates a strong ability to cover short-term obligations with readily available cash. The sharp decrease from 2021 to 2022 may signal a change in the company's cash management practices.

In summary, Woodward Inc's liquidity ratios have displayed a mix of strengths and potential areas of concern over the past five years. Further analysis of the underlying components contributing to these ratios may be necessary to fully assess the company's liquidity position.

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Additional liquidity measure

The cash conversion cycle of Woodward Inc has fluctuated over the past five years. In the most recent period ending on September 30, 2024, the company's cash conversion cycle stood at 94.49 days, indicating an improvement from the previous year. This suggests that Woodward Inc was able to manage its cash flow more efficiently in 2024.

Comparing the data over the five-year period, it is evident that the cash conversion cycle peaked in 2022 at 107.39 days and reached its lowest point in 2024. This variability may be attributed to changes in the company's working capital management and operational efficiency.

Overall, Woodward Inc's cash conversion cycle has shown some fluctuations, but the recent improvement is a positive sign of effective cash flow management. It is important for the company to continue monitoring and optimizing its cash conversion cycle to maintain or further improve its operational efficiency and financial performance in the future.