Advance Auto Parts Inc (AAP)

Liquidity ratios

Dec 31, 2023 Oct 7, 2023 Jul 15, 2023 Apr 22, 2023 Dec 31, 2022 Oct 8, 2022 Apr 23, 2022 Dec 31, 2021 Oct 9, 2021 Jul 17, 2021 Apr 24, 2021 Dec 31, 2020 Sep 30, 2020 Jul 11, 2020 Apr 18, 2020 Dec 31, 2019 Oct 5, 2019 Jul 13, 2019 Apr 20, 2019 Dec 31, 2018
Current ratio 1.20 1.21 1.24 1.23 1.11 1.13 1.20 1.21 1.24 1.27 1.32 1.32 1.38 1.44 1.36 1.27 1.31 1.36 1.34 1.57
Quick ratio 0.25 0.23 0.21 0.20 0.18 0.19 0.22 0.27 0.31 0.33 0.35 0.33 0.41 0.42 0.39 0.25 0.29 0.33 0.28 0.39
Cash ratio 0.09 0.06 0.05 0.04 0.05 0.04 0.03 0.12 0.12 0.17 0.18 0.18 0.23 0.26 0.26 0.09 0.13 0.17 0.12 0.23

Advance Auto Parts Inc's liquidity ratios have fluctuated over the past few years. The current ratio, which measures the company's ability to cover its short-term obligations with current assets, has shown some variability but generally remained above 1, indicating that the company has had sufficient current assets to cover its current liabilities. However, the current ratio has decreased slightly from 1.57 in December 2018 to 1.20 in December 2023.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also fluctuated over the years but has generally been below 1. This suggests that the company may have faced challenges in meeting its short-term obligations without relying on selling inventory. The quick ratio has shown a decreasing trend from 0.39 in December 2018 to 0.25 in December 2023.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents to cover current liabilities, has shown significant variability over the years. The cash ratio decreased from 0.23 in December 2018 to 0.09 in December 2023, indicating a potential decrease in the company's ability to cover its current liabilities solely with cash.

Overall, Advance Auto Parts Inc's liquidity ratios suggest that while the company has maintained a relatively stable current ratio above 1, its ability to quickly meet its short-term liabilities without relying on inventory or cash has shown some decline over the years. This highlights the importance of closely monitoring the company's liquidity position to ensure it can meet its financial obligations in a timely manner.


Additional liquidity measure

Dec 31, 2023 Oct 7, 2023 Jul 15, 2023 Apr 22, 2023 Dec 31, 2022 Oct 8, 2022 Apr 23, 2022 Dec 31, 2021 Oct 9, 2021 Jul 17, 2021 Apr 24, 2021 Dec 31, 2020 Sep 30, 2020 Jul 11, 2020 Apr 18, 2020 Dec 31, 2019 Oct 5, 2019 Jul 13, 2019 Apr 20, 2019 Dec 31, 2018
Cash conversion cycle days 48.00 58.13 66.42 64.18 48.45 57.83 61.38 52.38 56.27 49.60 54.76 62.00 64.68 70.59 74.10 66.59 66.59 69.19 72.13 71.71

The cash conversion cycle of Advance Auto Parts Inc has shown some fluctuations over the past few years. The company's cash conversion cycle measures the length of time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

From the data provided, we can see that the cash conversion cycle ranged from a low of 48.00 days to a high of 74.10 days over the period analyzed. A lower cash conversion cycle indicates that the company is efficiently managing its working capital and converting its inventory into sales and cash more quickly.

The trend in the cash conversion cycle shows some variation over time, with fluctuations occurring periodically. The cycle tends to peak during certain periods, such as in Jul 11, 2020 and Jul 13, 2019, where the company experienced longer cash conversion cycles. These longer cycles may indicate inefficiencies in managing inventory levels, collection of receivables, or payment of payables.

Overall, Advance Auto Parts Inc should focus on optimizing its working capital management to reduce the length of its cash conversion cycle, which can help improve cash flow and overall financial performance. Tracking the trend in the cash conversion cycle over time can provide valuable insights into the company's operational efficiency and effectiveness in managing its resources.