Cal-Maine Foods Inc (CALM)

The analysis of Cal-Maine Foods Inc.'s liquidity ratios over the specified periods indicates significant variations and overall improvement in liquidity profile across the analyzed time frame.

Starting with the current ratio, which measures a company's ability to meet its short-term obligations with its most liquid assets, there has been a marked upward trend. At the beginning of the observed period in August 2022, the current ratio stood at 3.38, reflecting a strong liquidity position. This ratio decreased slightly to 3.18 by November 2022 but then increased substantially, reaching a peak of 8.42 in August 2023. This substantial increase suggests a significant accumulation of current assets relative to current liabilities, enhancing the company's capacity to cover short-term obligations. Subsequently, the ratio experienced a decline to 6.92 by late 2023, then further reduced to 5.65 by February 2024, indicating a slight tightening but still remaining comfortably above typical liquidity thresholds. In the following periods, the ratio fluctuated, notably dropping to 3.86 in February 2025 before rebounding to 6.38 in May 2025. The overall trend shows periods of increased liquidity confidence, with the ratios remaining above 3 during most of the observed timeframe, signaling generally healthy liquidity positions.

The quick ratio, which refines liquidity measurement by excluding inventories from current assets, exhibits a similar upward trend initially. It began at 2.18 in August 2022, slightly increasing to 2.23 by late November 2022, and then experiencing a significant rise to 6.09 in August 2023. The quick ratio peaked at 6.09 before declining to 4.99 by late 2023 and further to 4.28 in mid-2024. A notable drop occurred to 3.18 in August 2024, but it later increased again to 5.40 by May 2025. These fluctuations suggest the company's access to liquid assets excluding inventories became more robust around mid-2023, aligning with increased short-term financial flexibility, though there was some reduction subsequently.

The cash ratio, which is the most conservative liquidity measure by considering only cash and cash equivalents, also reflects an improvement over time. It commenced at 1.22 in August 2022, rising to 2.06 by February 2023 and reaching a peak of 4.83 in August 2023. Post-peak, the ratio decreased to approximately 3.69 at the end of 2023 and further declined to 2.41 in February 2025, before ascending again to 4.52 in May 2025. The trend indicates periods of substantial cash holdings relative to short-term liabilities, especially around mid-2023, followed by fluctuations but generally remaining at levels suggesting solid liquidity.

In summary, Cal-Maine Foods Inc. exhibited a trend of improving liquidity ratios starting from August 2022 through mid-2023, with particularly strong positions observed in August 2023. Although some declines occurred afterward, the ratios remained within ranges indicative of adequate liquidity management. These patterns reflect strategic accumulation and utilization of liquid assets to support short-term financial health while maintaining flexibility across different periods.

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Additional liquidity measure

The cash conversion cycle (CCC) of Cal-Maine Foods Inc over the observed periods exhibits notable fluctuations. Initially, on August 27, 2022, the CCC was approximately 110.5 days, indicating a lengthy cycle where cash is committed for an extended period before being recovered. This figure dropped sharply to about 53.2 days by August 31, 2022, suggesting a significant improvement in managing the working capital.

Subsequent measurements reveal variability: the cycle increased again to around 95.65 days in late November 2022, then decreased to approximately 61.5 days at the month-end. Moving into 2023, the CCC demonstrated a downward trend with a low point of about 51.1 days in late February, followed by a slight rise to 54.6 days at the end of May, and further adjustments through 2023.

In late 2023, the CCC demonstrated a temporary increase to 78.44 days in early September, before decreasing again to approximately 71 days by November 30, 2023. The trend persisted into 2024, with the cycle remaining in the mid-70s days range, experiencing minor fluctuations. Notably, between May and June 2024, the CCC declined from around 57 days to approximately 56.3 days.

The most recent data points indicate a slight increase to about 66.6 days in August 2024, then a decline to approximately 70.2 days in November 2024 before settling around 62.5 days in February 2025 and further decreasing to roughly 52.8 days by the end of May 2025.

Overall, the data depict a pattern of significant initial reduction in the cycle duration, followed by periods of fluctuation with temporary increases and reductions. The trend suggests ongoing efforts to optimize the cash conversion cycle, although the variability indicates that external and internal factors continue to influence working capital management efficiency.