PC Connection Inc (CNXN)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 3.14 | 3.20 | 3.07 | 2.49 | 2.51 |
| Quick ratio | 3.00 | 2.93 | 2.55 | 2.04 | 2.26 |
| Cash ratio | 1.19 | 0.91 | 0.40 | 0.29 | 0.28 |
Based on the liquidity ratios of PC Connection Inc, we can see positive trends over the years:
1. Current Ratio: The company's current ratio has been consistently above 2, indicating that PC Connection Inc has more than enough current assets to cover its current liabilities. The ratio increased from 2.51 in 2020 to 3.14 in 2024, reflecting a strengthening liquidity position.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, measures the company's ability to meet its short-term obligations with its most liquid assets. PC Connection Inc maintained a healthy quick ratio above 2 throughout the years, showing a strong ability to cover its current liabilities without relying on inventory. The ratio improved from 2.04 in 2021 to 3.00 in 2024.
3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents alone. PC Connection Inc's cash ratio has shown a significant increase from 0.28 in 2020 to 1.19 in 2024, indicating a substantial improvement in its ability to meet short-term obligations using its cash reserves.
Overall, the liquidity ratios of PC Connection Inc demonstrate a sound financial position with improving liquidity levels over the years. The company seems well-equipped to meet its short-term obligations and fund its operational activities.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 59.99 | 66.58 | 75.10 | 72.88 | 77.32 |
The cash conversion cycle of PC Connection Inc has shown a decreasing trend over the past five years, indicating improved efficiency in managing its working capital. In 2020, the cash conversion cycle was 77.32 days, decreasing to 72.88 days in 2021, and further to 75.10 days in 2022. A more significant improvement was observed in 2023, with the cycle dropping to 66.58 days, and the trend continued in 2024, reaching 59.99 days.
A shorter cash conversion cycle suggests that the company is generating cash more quickly from its operational activities, which is a positive sign of efficiency. This improvement may be attributed to better management of inventory, receivables, and payables, indicating that PC Connection Inc is effectively converting its investments in raw materials and finished goods into sales and ultimately into cash.
Overall, the decreasing trend in the cash conversion cycle is a positive indicator for PC Connection Inc, reflecting its ability to optimize cash flow and efficiently manage working capital.