CarGurus (CARG)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 4.20 | 3.40 | 5.65 | 3.30 | 4.99 |
| Quick ratio | 3.27 | 2.71 | 4.76 | 1.89 | 4.36 |
| Cash ratio | 3.27 | 2.71 | 4.76 | 1.89 | 4.36 |
CarGurus' liquidity ratios have shown fluctuations over the years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 4.99 in 2020 to 3.30 in 2021, before increasing to 5.65 in 2022, but then dropping to 3.40 in 2023 and settling at 4.20 in 2024.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, followed a similar pattern. It declined from 4.36 in 2020 to 1.89 in 2021, then rose to 4.76 in 2022, dropped to 2.71 in 2023, and improved slightly to 3.27 in 2024.
The cash ratio, which reflects the company's ability to cover its current liabilities with cash and cash equivalents, also saw fluctuations mirroring the trend of the quick ratio.
Overall, while CarGurus maintained relatively high liquidity ratios throughout the years, there were some periods of decline which may indicate potential challenges in meeting short-term obligations. It is important for the company to continuously monitor and manage its liquidity position to ensure financial stability and meet its obligations effectively.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.79 | 0.46 | 1.93 | 24.40 | 0.00 |
The cash conversion cycle of CarGurus has shown significant fluctuations over the years. In 2020, the company achieved a cash conversion cycle of 0.00 days, indicating an efficient management of cash flows. However, in 2021, the cycle increased to 24.40 days, signifying a potential delay in converting its investments into cash.
The trend reversed in 2022, with a notable improvement in the cash conversion cycle to 1.93 days, suggesting enhanced efficiency in managing working capital and converting sales into cash. This positive trend continued in 2023, as the cycle further decreased to 0.46 days, showcasing the company's ability to swiftly convert its resources into cash.
In 2024, the cash conversion cycle slightly increased to 0.79 days, indicating a minor delay in the conversion process compared to the previous year. Overall, CarGurus has demonstrated varying levels of effectiveness in managing its cash conversion cycle over the specified period, highlighting fluctuations in its working capital management practices.