Charles River Laboratories (CRL)

Liquidity ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.52 1.45 1.49 1.48 1.32 1.40 1.33 1.34 1.23 1.40 1.36 1.77 1.43 1.45 1.70 1.75 1.44 1.43 1.59 1.64
Quick ratio 1.00 0.96 0.99 0.21 0.90 0.96 0.91 0.96 0.86 0.89 0.93 1.34 1.01 1.04 1.29 1.33 1.06 1.01 1.17 1.18
Cash ratio 0.26 0.16 0.20 0.21 0.22 0.19 0.19 0.24 0.23 0.22 0.24 0.58 0.27 0.31 0.55 0.54 0.34 0.24 0.32 0.24

Charles River Laboratories has maintained a relatively stable current ratio over the years, ranging from a low of 1.23 in December 2021 to a high of 1.52 in December 2023. This indicates that the company has generally been able to meet its short-term obligations using its current assets.

However, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has been more volatile. The quick ratio has fluctuated significantly, with a low of 0.21 in March 2023 and a high of 1.34 in December 2022. This suggests that the company may have had periods where it struggled to meet its short-term obligations without relying on inventory.

The cash ratio, which is the most conservative measure of liquidity as it only includes cash and cash equivalents, paints a similar picture. The cash ratio has been relatively low, with fluctuations ranging from 0.16 to 0.58. This indicates that the company may have limited readily available cash to cover immediate obligations.

Overall, while the current ratio suggests that Charles River Laboratories has been able to maintain a comfortable level of liquidity, the quick ratio and cash ratio indicate that the company may face challenges in meeting short-term obligations without relying on inventory or external financing. Management should continue to monitor these ratios closely to ensure the company's liquidity position remains stable.

Additional liquidity measure

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 125.74 109.57 107.06 40.38 88.89 113.17 97.63 69.25 69.10 98.24 115.69 111.20 113.65 123.30 120.29 108.35 100.92 106.27 105.34 111.35

The cash conversion cycle of Charles River Laboratories has exhibited fluctuations over the past several quarters. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and accounts receivable into cash flows from sales.

From the data provided, we can see that the cash conversion cycle ranged from 40.38 days to 125.74 days. A longer cash conversion cycle signifies that the company takes more time to convert its investments into cash, which could potentially strain liquidity.

In the first quarter of 2023, the cash conversion cycle was at its lowest at 40.38 days indicating an efficient management of inventory and accounts receivable. However, this improved cycle was followed by an increase over the subsequent quarters, reaching a peak of 125.74 days in December 2023. This significant increase could be a signal of potential issues in managing working capital efficiently.

It is important for the company to monitor and manage its cash conversion cycle effectively to ensure optimal cash flow management and liquidity. Any prolonged unfavorable trends in the cash conversion cycle could indicate inefficiencies in managing inventory, accounts receivable, or accounts payable, which may impact the company's financial health and operational efficiency.