Asbury Automotive Group Inc (ABG)

Asbury Automotive Group Inc's liquidity ratios indicate the company's ability to meet its short-term financial obligations.

The current ratio shows a declining trend over the past five years, from 1.29 in 2019 to 1.06 in 2023. A current ratio above 1 indicates that the company has more current assets than current liabilities. However, the decreasing trend suggests a potential weakening in the company's ability to cover its short-term obligations.

The quick ratio also shows a decrease over the same period, from 0.37 in 2019 to 0.33 in 2023. The quick ratio measures a company's ability to pay off its current liabilities without relying on the sale of inventory. As the quick ratio is lower than the current ratio, it indicates that the company has a significant amount of inventory that may not be easily convertible to cash.

The cash ratio has also declined from 0.26 in 2019 to 0.25 in 2023. This ratio compares a company's cash and cash equivalents to its current liabilities, providing insight into the company's ability to cover its short-term obligations with its most liquid assets. The decreasing trend in the cash ratio suggests a potential shortage of liquid assets relative to current liabilities.

Overall, the decreasing trend in all three liquidity ratios raises concerns about Asbury Automotive Group Inc's ability to meet its short-term financial obligations and suggests a need for careful monitoring of its liquidity position.

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Additional liquidity measure

The cash conversion cycle of Asbury Automotive Group Inc has fluctuated over the past five years. In 2020, the company had a relatively long cash conversion cycle of 56.00 days, indicating that it took the company 56 days on average to convert its investments in inventory and other resources into cash receipts from sales. This could have tied up a significant amount of the company's capital for an extended period.

In 2021, there was a notable improvement in the cash conversion cycle to 34.03 days, suggesting that the company became more efficient in managing its working capital and converting its resources into cash. However, in 2022, the cash conversion cycle decreased further to 28.09 days, indicating an even more efficient utilization of resources and faster conversion to cash.

In the latest year, 2023, the cash conversion cycle increased to 54.44 days, signaling a potential slowdown in the company's cash conversion efficiency compared to the previous year.

Overall, monitoring the cash conversion cycle is crucial for Asbury Automotive Group Inc as it reflects the effectiveness of the company's working capital management. A shorter cash conversion cycle indicates that the company is efficiently managing its working capital, while a longer cycle may suggest potential inefficiencies or operational challenges that could impact the company's cash flow and overall financial performance.