Woodward Inc (WWD)

Woodward Inc's liquidity ratios demonstrate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated over the past five years. The ratio has remained above 1, indicating a strong ability to meet short-term obligations. However, there has been a slight decline from 4.00 in 2021 to 2.38 in 2023.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also shows a similar trend. Although the ratio has fluctuated, it has consistently been above 1, indicating the company's ability to cover its short-term liabilities with its most liquid assets.

The cash ratio, which focuses solely on a company's ability to cover its short-term liabilities with its cash and cash equivalents, has also experienced fluctuations. However, it has generally remained low compared to the current and quick ratios, indicating that the company relies on other current assets in addition to cash to meet its short-term obligations.

Overall, Woodward Inc's liquidity ratios demonstrate a relatively strong ability to meet its short-term obligations, although there have been some fluctuations in the ratios over the years.

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Additional liquidity measure

Woodward Inc's cash conversion cycle (CCC) has fluctuated over the past five years. In the fiscal year ending September 30, 2023, the CCC stood at 141.94 days, a slight improvement from the previous year's 149.99 days. This indicates that the company took, on average, approximately 141.94 days to convert its resource inputs into cash flows from sales and back into cash through collections.

Comparing this with the data from earlier years, it is evident that in 2021, the CCC was 140.61 days, slightly lower than the current period. In 2020, the CCC was 142.65 days, and in 2019, it stood at 121.47 days.

These figures suggest that Woodward Inc's efficiency in managing its working capital may have fluctuated over the years, with a moderate increase in the CCC in recent periods. A higher CCC typically indicates that the company is taking longer to convert its inventory and receivables into cash, potentially tying up more capital in its operating cycle.

In summary, Woodward Inc's CCC has shown some variability in recent years, and further examination of the company's working capital management practices and operational efficiency may be warranted to identify potential areas for improvement.