Cable One Inc (CABO)

Cable One Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.

1. Current Ratio:
The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Cable One Inc's current ratio has fluctuated over the years. In 2020 and 2019, the current ratio was 3.04 and 0.96 respectively. This suggests a significant improvement in liquidity from 2019 to 2020. Since then, the current ratio has remained relatively stable, standing at 1.69 in both 2023 and 2022. A current ratio above 1 indicates that the company has more current assets than current liabilities, which is generally considered a positive sign.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Cable One Inc's quick ratio has mirrored the trend of the current ratio, standing at 1.42 in 2023 and 2022. This indicates that the company has a healthy level of liquid assets to cover its short-term obligations. The quick ratio has also displayed stability over the years, remaining consistent with the current ratio figures.

3. Cash Ratio:
The cash ratio, the most conservative measure of liquidity, assesses the company's ability to settle its current liabilities using only its cash and cash equivalents. Cable One Inc's cash ratio has demonstrated a similar pattern to the other liquidity ratios, with an increase from 0.75 in 2019 to 1.22 in 2023. This indicates an improvement in the company's cash position over the years, enhancing its ability to meet short-term obligations solely from cash reserves.

Overall, Cable One Inc's liquidity ratios suggest that the company has maintained a strong liquidity position in recent years, with ample assets to cover its short-term liabilities. The stability in these ratios indicates a consistent financial health and ability to manage liquidity effectively.

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Additional liquidity measure

The cash conversion cycle of Cable One Inc has shown an increasing trend from 2019 to 2023, indicating a potential deterioration in the efficiency of its working capital management. The company took 20.44 days to convert its investments in inventory and receivables into cash in 2023, compared to 15.56 days in 2022 and 12.79 days in 2021. This suggests that Cable One Inc may be facing challenges in managing its inventory levels and collecting receivables efficiently, which could impact its liquidity and overall financial health. Further analysis of the company's operational and financial strategies may be warranted to address these trends.