Topbuild Corp (BLD)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 2.66 | 1.96 | 1.62 | 1.89 | 1.64 |
| Quick ratio | 2.14 | 1.36 | 1.10 | 1.53 | 1.29 |
| Cash ratio | 1.10 | 0.30 | 0.19 | 0.66 | 0.39 |
The liquidity ratios of TopBuild Corp have exhibited varying trends over the past five years. The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, has shown an overall increasing trend from 1.64 in 2019 to 2.66 in 2023. This indicates that TopBuild Corp has improved its short-term liquidity position over the years.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown an increasing trend from 1.32 in 2019 to 2.18 in 2023. This suggests that the company has enhanced its ability to meet immediate financial obligations without relying on inventory.
The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents alone, has also demonstrated an increasing trend from 0.42 in 2019 to 1.15 in 2023. This signifies that TopBuild Corp has strengthened its cash position relative to its short-term liabilities.
Overall, the improving trend in all three liquidity ratios indicates that TopBuild Corp has enhanced its liquidity position and is better positioned to meet its short-term financial obligations.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 48.38 | 57.56 | 58.04 | 32.44 | 36.25 |
The cash conversion cycle of TopBuild Corp has varied over the last five years. In 2023, the company's cash conversion cycle stood at 45.48 days, reflecting a decrease from the previous year. This suggests that TopBuild Corp is taking less time to convert its investments in inventory and accounts receivable into cash.
Comparing this to historical data, in 2022, the cash conversion cycle was 55.90 days, marking an increase from the previous year. However, in 2021 and 2020, the cycle was 54.13 days and 25.85 days, respectively. There was an evident increase from 2020 to 2021, but a significant decrease in 2020 compared to 2019, where the cycle was 29.80 days.
Overall, a lower cash conversion cycle indicates that TopBuild Corp is managing its working capital more efficiently, potentially leading to improved cash flow and liquidity. It's worth noting the fluctuation in the cycle over the years, suggesting the company's effectiveness in managing its inventory, receivables, and payables varies annually.