ArcBest Corp (ARCB)

The liquidity ratios provide valuable insights into ArcBest Corp's ability to meet its short-term obligations and manage its cash flow effectively.

1. Current Ratio: This ratio indicates ArcBest's ability to cover its short-term liabilities with its current assets. A current ratio above 1 suggests that the company has more current assets than current liabilities. ArcBest Corp's current ratio has been relatively stable over the past five years, ranging from 1.10 to 1.50. The current ratio stood at 1.26 as of December 31, 2023, indicating that the company had $1.26 in current assets for every $1 in current liabilities.

2. Quick Ratio: The quick ratio is a more stringent measure of liquidity that excludes inventory from current assets. Like the current ratio, ArcBest Corp's quick ratio has also remained consistent over the years, ranging from 1.10 to 1.50. The quick ratio was 1.26 as of December 31, 2023, suggesting that the company can cover its short-term obligations without relying on inventory sales.

3. Cash Ratio: The cash ratio is the most stringent liquidity measure, focusing solely on cash and cash equivalents to cover current liabilities. ArcBest's cash ratio has fluctuated over the years, ranging from 0.26 to 0.83. As of December 31, 2023, the cash ratio was 0.57, indicating that the company had $0.57 in cash and cash equivalents for every $1 in current liabilities.

Overall, ArcBest Corp's liquidity ratios demonstrate a relatively stable and healthy liquidity position, with the company maintaining adequate levels of current assets to meet its short-term obligations. The consistent performance of these ratios over the years suggests a prudent approach to managing liquidity and cash flow within the organization.

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Additional liquidity measure

The cash conversion cycle is a metric that measures how efficiently a company manages its cash flows related to its operating cycle. ArcBest Corp's cash conversion cycle has fluctuated over the past five years.

In 2023, the cash conversion cycle decreased to 39.76 days from 40.61 days in 2022, indicating that the company was able to convert its inventory into cash more quickly. This improvement suggests effective management of inventory and collection of receivables during the year.

In 2021, the cash conversion cycle increased significantly to 54.61 days from 41.61 days in 2020. This longer cycle may indicate potential inefficiencies in managing working capital, possibly due to challenges in inventory turnover or collections from customers.

In 2020, the company's cash conversion cycle was relatively stable at 41.61 days, showing consistency in converting inventory and receivables into cash compared to the prior year.

In 2019, ArcBest Corp had a cash conversion cycle of 36.81 days, reflecting a relatively shorter cycle compared to subsequent years. This suggests that the company was efficient in managing its working capital and converting its assets into cash during that period.

Overall, analyzing the trend in ArcBest Corp's cash conversion cycle indicates fluctuations in managing working capital over the past five years. It is essential for the company to closely monitor its operating cycle to ensure optimal cash flow efficiency and liquidity management.