Crocs Inc (CROX)

Crocs Inc's liquidity ratios indicate the company's ability to meet its short-term obligations.

1. Current Ratio: Crocs Inc's current ratio has been fluctuating over the years, from 1.69 in 2020 to 1.18 in 2024. Although the ratio remains above 1, indicating that the company has more current assets than current liabilities, there has been a slight decline in recent years, potentially signaling a decrease in the company's short-term liquidity.

2. Quick Ratio: The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a decreasing trend from 0.99 in 2020 to 0.60 in 2024. This indicates that Crocs Inc may have more difficulty meeting its short-term obligations without relying on inventory or other less liquid assets.

3. Cash Ratio: The cash ratio, which evaluates the company's ability to cover its current liabilities with its cash and cash equivalents, has fluctuated over the years but shows a decreasing trend from 0.47 in 2020 to 0.24 in 2024. This suggests that Crocs Inc may have a reduced ability to cover its short-term obligations with readily available cash.

Overall, the decreasing trend in Crocs Inc's liquidity ratios, specifically the quick ratio and cash ratio, may raise concerns about the company's short-term financial health and ability to meet its current obligations without facing liquidity challenges.

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Additional liquidity measure

The cash conversion cycle of Crocs Inc has shown fluctuation over the past five years. In December 31, 2020, the company's cash conversion cycle was 59.41 days, indicating the number of days it takes for the company to convert its investments in inventory and accounts receivable into cash flows. By December 31, 2021, the cash conversion cycle decreased to 44.02 days, suggesting an improvement in the company's efficiency in managing its working capital.

However, in December 31, 2022, the cash conversion cycle increased to 65.37 days, which may indicate challenges in managing inventory and collecting receivables efficiently. The following year, by December 31, 2023, a decrease in the cash conversion cycle to 45.16 days suggests a potential improvement in working capital management.

The most recent data as of December 31, 2024, shows a further reduction in the cash conversion cycle to 33.99 days, signaling a positive trend in converting investments into cash. Overall, while there have been fluctuations in the cash conversion cycle of Crocs Inc, the company seems to be making efforts to optimize its working capital management over the years.