Central Garden & Pet Company (CENT)
Liquidity ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 3.66 | 3.73 | 3.34 | 2.96 | 3.46 |
| Quick ratio | 2.10 | 1.79 | 1.19 | 1.55 | 2.37 |
| Cash ratio | 1.46 | 1.07 | 0.38 | 0.82 | 1.48 |
Central Garden & Pet Company has shown consistent strength in its liquidity position based on its liquidity ratios over the past five years. The current ratio has generally been above 3, indicating the company's ability to meet its short-term obligations with its current assets, with a slight decrease from 3.73 in 2023 to 3.66 in 2024. The quick ratio has also been healthy, staying above 1 in most years, although there was a significant improvement from 1.19 in 2022 to 2.10 in 2024. This signifies the company's capacity to cover its immediate liabilities without relying on inventory.
The cash ratio, although lower than the current and quick ratios, has gradually increased over the years, with a substantial rise from 0.38 in 2022 to 1.46 in 2024. This reflects Central Garden & Pet Company's ability to pay off its current liabilities with its cash and cash equivalents alone, indicating a strong cash position.
Overall, the liquidity ratios suggest that Central Garden & Pet Company is in a favorable financial position in terms of its ability to meet short-term obligations and manage liquidity effectively.
Additional liquidity measure
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 125.41 | 136.68 | 153.56 | 111.38 | 98.10 |
The cash conversion cycle (CCC) of Central Garden & Pet Company has fluctuated over the past five years. In the latest fiscal year ended September 30, 2024, the CCC stood at 125.41 days, showing an improvement compared to the previous year's 136.68 days. This indicates that the company was able to manage its working capital more efficiently and convert its inventory and receivables into cash at a quicker pace.
Looking back over the five-year period, it is evident that the CCC peaked at 153.56 days in September 2022, indicating a longer time taken to convert investments in inventory and receivables into cash. The following year, the CCC decreased to 111.38 days, suggesting better working capital management. In September 2020, the company had a CCC of 98.10 days, which was the lowest among the five years analyzed.
Overall, Central Garden & Pet Company has shown some variability in its cash conversion cycle, but the trend in recent years indicates an improvement in managing its working capital and converting assets into cash. It is important for the company to continue monitoring and optimizing its CCC to ensure efficient cash flow management and sustainable operations.