Charles River Laboratories (CRL)

The liquidity ratios of Charles River Laboratories over the past five years indicate the company's ability to meet its short-term obligations and cover immediate financial needs.

1. Current Ratio: The current ratio measures the company's ability to pay short-term obligations with its current assets. Charles River Laboratories' current ratio has been fluctuating over the past five years, ranging from 1.23 to 1.52. The ratio improved in 2023 compared to the previous year, indicating that the company's current assets are relatively higher compared to its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Charles River Laboratories' quick ratio has also varied over the years, with values between 0.86 and 1.06. In 2023, the quick ratio improved to 1.00, signaling the company's ability to cover its short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with cash and cash equivalents alone. Charles River Laboratories' cash ratio has been declining gradually over the past five years, indicating a decrease in the proportion of cash and cash equivalents to cover short-term obligations. The cash ratio stood at 0.26 in 2023, suggesting that the company may have a higher reliance on other current assets to meet its short-term obligations.

Overall, the analysis of Charles River Laboratories' liquidity ratios shows that while the company has been able to maintain a satisfactory level of liquidity over the years, there have been fluctuations in these ratios, possibly due to changes in working capital management or business operations. It is important for investors and stakeholders to monitor these ratios continuously to assess the company's ability to meet its financial obligations in the short term.

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Additional liquidity measure

The cash conversion cycle of Charles River Laboratories has shown fluctuating trends over the past five years. In 2023, the company's cash conversion cycle increased significantly to 149.91 days, indicating a longer period required to convert investments in inventory back into cash. This increase may be a result of slower collection of receivables or longer inventory turnover.

In 2022, the cash conversion cycle decreased to 89.03 days, reflecting a more efficient use of working capital compared to previous years. This improvement suggests improved management of inventory, receivables, and payables leading to a faster cash conversion process.

In 2021, the cash conversion cycle was 69.15 days, showing a further optimization of working capital efficiency. The company managed to convert investments in inventory into cash at a faster rate, potentially through better inventory management and collection of receivables.

However, in 2020, the cash conversion cycle increased to 111.52 days, indicating a temporary deterioration in working capital efficiency. This could be due to factors such as a slowdown in sales, delayed receivables collection, or increased inventory holding periods.

In 2019, the cash conversion cycle was 101.26 days, demonstrating relatively stable working capital efficiency compared to the following years. Overall, Charles River Laboratories should continue to monitor and manage its cash conversion cycle to ensure optimal utilization of resources and sustainable business operations.