Avis Budget Group Inc (CAR)

Avis Budget Group Inc's liquidity ratios, based on the provided data, indicate a concerning trend over the years.

1. Current Ratio measures the company's ability to cover its short-term obligations with its short-term assets. A decreasing trend from 0.87 in 2020 to 0.75 in 2024 is observed, indicating that the company may be facing challenges in meeting its current liabilities with available current assets.

2. Quick Ratio or Acid-Test Ratio is a more stringent measure of liquidity as it excludes inventory from current assets. A decreasing trend from 0.34 in 2020 to 0.20 in 2024 suggests that Avis Budget Group Inc may have difficulties in meeting its short-term obligations without relying on selling inventory quickly.

3. Cash Ratio shows the proportion of cash and cash equivalents to cover current liabilities. A stable but low liquidity position is seen with the ratio remaining constant at 0.22 from 2021 to 2024.

In conclusion, the declining trend of the current and quick ratios, coupled with a consistently low cash ratio, indicates potential liquidity challenges for Avis Budget Group Inc. It may need to closely monitor and manage its liquidity position to ensure the company can meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Avis Budget Group Inc has shown varying trends over the years. In December 2020, the company's cash conversion cycle was 34.85 days, indicating that on average, it took the company about 34.85 days to convert its investments in inventory and other resources into cash flows from sales.

By December 2021, the cash conversion cycle increased to 49.55 days, suggesting that the company took longer to convert its investments into cash during that period. This increase could be due to factors such as extended payment terms with suppliers or changes in inventory management practices.

In December 2022, the cash conversion cycle further extended to 74.78 days, indicating that Avis Budget Group Inc faced challenges in efficiently managing its working capital during that year. The significant increase in the cash conversion cycle could point to issues such as slower collection of receivables or inefficient inventory turnover.

Interestingly, the cash conversion cycle dropped to 0.00 days by December 2023 and remained at 0.00 days in December 2024. A cash conversion cycle of 0.00 days typically signifies that the company is able to convert its investments into cash almost instantaneously, possibly indicating improved efficiency in working capital management.

Overall, these fluctuations in the cash conversion cycle of Avis Budget Group Inc highlight the company's effectiveness in managing its liquidity and working capital over the years, with notable improvements in 2023 and 2024.