Central Garden & Pet Company A (CENTA)

Central Garden & Pet Company A's liquidity ratios have varied over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has generally been healthy, ranging from 2.96 to 3.73 with a peak of 3.73 in 2023. This indicates that the company has more than enough current assets to meet its short-term liabilities.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has fluctuated more significantly, ranging from 1.19 to 2.37. In 2022, the quick ratio was relatively low at 1.19, suggesting that the company may have had some difficulty meeting its short-term obligations without relying on inventory. However, the ratio improved in subsequent years, reaching a high of 2.37 in 2020.

The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, also showed variability over the years. The ratio ranged from 0.38 to 1.48, with the lowest value in 2022. A cash ratio below 1 indicates that the company may have limited ability to cover its current liabilities with cash on hand alone, which was the case in 2022. However, the ratio improved in the following years.

Overall, Central Garden & Pet Company A's liquidity ratios have shown a general trend of stability and improvement over the five-year period, with adequate current assets to cover its short-term liabilities in most years. It is important for the company to maintain a healthy liquidity position to weather any unforeseen financial challenges and meet its obligations as they come due.

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Additional liquidity measure

The cash conversion cycle for Central Garden & Pet Company A has fluctuated over the past five years. In 2024, it was 125.41 days, showing an improvement from the previous year's cycle of 136.68 days. However, compared to 2022 and 2023, the cash conversion cycle has shown a downward trend, indicating that the company is taking longer to convert its resources into cash during those years. In 2021, the cycle was 111.38 days, and in 2020, it was 98.10 days, reflecting a more efficient cash conversion process during those periods. Overall, understanding the changes in the cash conversion cycle can provide insights into how effectively the company manages its working capital and liquidity.