Crocs Inc (CROX)

Crocs Inc's liquidity ratios have shown some fluctuations over the past five years.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. A higher current ratio indicates better short-term liquidity. Crocs' current ratio has fluctuated between 1.30 and 1.72 over the past five years, with a decreasing trend in recent years. This indicates that Crocs may have a slightly lower ability to cover its current liabilities with its current assets compared to previous years.

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. Crocs' quick ratio has also fluctuated over the years, ranging from 0.75 to 1.17. Similar to the current ratio, the quick ratio has shown a decreasing trend in recent years, indicating the company's ability to meet its short-term obligations without relying on inventory has declined.

3. Cash Ratio: The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents alone. Crocs' cash ratio has shown a declining trend, ranging from 0.28 to 0.61 over the past five years. This indicates that Crocs may have a lower ability to cover its short-term liabilities with cash only, which could potentially signal a liquidity risk.

In summary, Crocs Inc's liquidity ratios have experienced fluctuations over the years, with a general decreasing trend in recent years. This suggests that the company may have a slightly reduced ability to meet its short-term obligations using its current assets and cash reserves. Monitoring and managing liquidity efficiently will be crucial for the company to maintain its financial stability and operational resilience.

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Additional liquidity measure

Crocs Inc's cash conversion cycle has fluctuated over the past five years. The company's cash conversion cycle measures the length of time it takes for the company to convert its investments in inventory and other resources into cash flows from sales. A lower cash conversion cycle is generally preferred as it indicates that the company is able to efficiently manage its working capital and turn its resources into cash more quickly.

In 2023, Crocs Inc's cash conversion cycle decreased to 56.36 days, a significant improvement from the previous year. This suggests that the company was able to manage its inventory and accounts receivable more effectively, leading to a faster conversion of resources into cash. The reduced cash conversion cycle indicates improved working capital management and potentially increased operational efficiency.

In contrast, in 2022, the cash conversion cycle increased to 85.65 days, which may indicate challenges in managing working capital and converting resources into cash promptly. However, the company was able to improve this metric in 2023, showing a positive trend towards more efficient liquidity management.

Looking back at the past five years, it is evident that Crocs Inc has experienced fluctuations in its cash conversion cycle. The company saw improvements in 2023 and 2021 compared to 2020 and 2019. This indicates that management efforts to streamline operations and enhance working capital efficiency have been effective in certain years.

Overall, Crocs Inc's cash conversion cycle is a key metric that reflects the company's ability to efficiently manage its working capital and convert resources into cash. The fluctuations in this metric over the past five years demonstrate the importance of monitoring and optimizing working capital management practices to achieve improved liquidity and operational efficiency.