Central Garden & Pet Company A (CENTA)

The liquidity ratios of Central Garden & Pet Co. reflect the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its short-term liabilities with its short-term assets, has been consistently strong over the past five years, with a current ratio of 3.73 as of September 30, 2023. This indicates that the company has ample current assets to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. This ratio has fluctuated over the years, with a value of 1.87 as of September 30, 2023, showing a decreasing trend compared to the previous year. While the quick ratio is still above 1, indicating that the company has an acceptable level of quick assets to cover short-term liabilities, the decreasing trend may warrant further attention.

The cash ratio, which measures the company's ability to cover its short-term liabilities with its cash and cash equivalents, has also shown fluctuations over the years. As of September 30, 2023, the cash ratio stands at 1.14, indicating that the company holds sufficient cash to cover its immediate liabilities.

In summary, Central Garden & Pet Co. demonstrates strong liquidity, as evidenced by its consistently high current ratio. However, the decreasing trend in the quick ratio warrants monitoring for potential impacts on the company's ability to cover short-term obligations.

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Additional liquidity measure

The cash conversion cycle of Central Garden & Pet Co. has exhibited fluctuations over the past five years. The cycle peaked at 153.56 days in September 2022, indicating an extended period for the company to convert its investments in inventory and other resources into cash. However, in September 2023, the cycle decreased to 136.68 days, potentially reflecting improved efficiency in managing the conversion of its resources into cash. Comparatively, the cycle was lower in September 2021 at 111.38 days, possibly signaling a more favorable working capital management. The company experienced a relatively shorter cash conversion cycle in September 2020 at 98.10 days, which may suggest enhanced operational effectiveness in the conversion process. In September 2019, the cycle increased to 114.87 days, likely indicating a lengthened period required for the company to convert its investments into cash. These fluctuations in the cash conversion cycle demonstrate varying levels of efficiency in Central Garden & Pet Co.'s management of working capital and inventory turnover over the past five years.