CAVA Group, Inc. (CAVA)

Current ratio

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Total current assets	US$ in thousands	394,154	354,912	58,150	154,394	416,200
Total current liabilities	US$ in thousands	132,636	109,036	84,318	51,725	108,300
Current ratio		2.97	3.25	0.69	2.98	3.84

December 31, 2024 calculation

Current ratio = Total current assets ÷ Total current liabilities
= $394,154K ÷ $132,636K
= 2.97

The analysis of CAVA Group, Inc.'s current ratio over the period from December 31, 2020, to December 31, 2024, reveals notable fluctuations in the company's short-term liquidity position.

At the end of 2020, the current ratio stood at 3.84, indicating a strong liquidity cushion whereby current assets substantially exceeded current liabilities. This high ratio suggests that the company was well-positioned to meet its short-term obligations at that time.

In the subsequent year, 2021, the current ratio declined to 2.98, reflecting a reduction in liquidity but remaining comfortably above the generally accepted threshold of 1.0, which signifies the ability to cover current liabilities with current assets. While this decline indicates some decrease in liquidity, the company maintained a stable position.

By the end of 2022, the current ratio markedly decreased to 0.69. This significant drop suggests a potential liquidity concern, as current assets no longer cover current liabilities, raising questions about the company's capacity to meet short-term obligations without additional financing or asset liquidations. This decline could indicate operational challenges, increased liabilities, or a strategic shift in asset composition.

In the following year, 2023, the current ratio rebounded to 3.25, surpassing previous levels and restoring the company's liquidity stance to a comfortable range. This recovery suggests an improvement in the company's ability to cover short-term liabilities, potentially due to asset growth, liability reduction, or both.

By 2024, the current ratio remained stable at 2.97, maintaining a strong liquidity position comparable to 2021 levels. This consistent ratio indicates sustained capability to meet immediate financial obligations without undue stress.

Overall, CAVA Group, Inc.'s current ratio experienced considerable volatility over the analyzed period. The initial high ratio in 2020 reflects a robust liquidity position, while the sharp decline in 2022 signals a period of potential liquidity stress. The subsequent recovery and stabilization suggest a strategic or operational improvement that restored the company's short-term financial health. Continuous monitoring of current assets and liabilities is recommended to assess whether these fluctuations are short-term phenomena or indicative of longer-term strategic shifts.