Cal-Maine Foods Inc (CALM)

The analysis of Cal-Maine Foods Inc.'s liquidity ratios indicates a consistently strong liquidity position over the periods analyzed.

The current ratio has remained high, reflecting a solid ability to meet short-term obligations with current assets. Specifically, it was 6.16 on May 31, 2023, maintaining the same level shortly afterward, and experiencing a slight decrease to 5.45 by May 31, 2024. A further increase to 6.38 is observed in the projection for May 31, 2025. Such elevated current ratios suggest the company possesses ample current assets relative to its current liabilities, indicating financial stability and low short-term liquidity risk.

The quick ratio, which excludes inventory from current assets, also demonstrates strong liquidity, with values consistently above 4.0 across all periods. It was 4.57 on May 31, 2023, persisting at the same level in early June, then decreasing marginally to 4.28 by May 31, 2024. The ratio subsequently increases to an estimated 5.40 in May 2025. The high quick ratio indicates an excellent ability to satisfy immediate liabilities with liquid assets, without relying heavily on inventory sales.

The cash ratio, representing the most conservative measure of liquidity, presents similarly robust figures. It was 3.55 on May 31, 2023, stable shortly thereafter, and rising slightly to 3.57 in May 2024. The projected cash ratio for May 2025 shows a significant increase to 4.52, underscoring a strong cash position that enhances liquidity resilience.

Overall, Cal-Maine Foods Inc. maintains high liquidity ratios, which trend favorably over the projection period. These ratios collectively suggest the company is well-positioned to cover its short-term obligations with readily available assets, thereby minimizing liquidity risk and indicating a conservative and sound liquidity management approach.

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Additional liquidity measure

The cash conversion cycle (CCC) of Cal-Maine Foods Inc. has exhibited notable fluctuations over the observed periods, reflecting changes in the company's operational efficiency and management of working capital.

As of May 31, 2023, the CCC was approximately 59.50 days. This metric decreased slightly to 55.45 days by June 3, 2023, indicating an improvement in cash flow efficiency during that short interval. However, by May 31, 2024, the cycle increased to approximately 63.51 days, representing a longer period for the company to convert investments into cash, which could suggest increased inventory holding periods or extended receivables collection times.

Subsequently, the CCC decreased again to about 59.15 days as of June 1, 2024, signaling a partial recovery in cash conversion efficiency. The most recent data point on May 31, 2025, shows the CCC at approximately 52.79 days, the lowest among the observed periods, indicating a significant improvement in the company's operational and liquidity management.

Overall, the trend suggests that Cal-Maine Foods Inc. has experienced cyclical variations in its cash conversion cycle over the analyzed timeframe, with a general trend towards shorter cycles by the end of the latest period. These fluctuations are indicative of efforts to optimize inventory turnover, receivables collection, and payables management to enhance cash flow and operational efficiency.