Cavco Industries Inc (CVCO)

Cavco Industries Inc's liquidity ratios have shown overall improvement over the past five years. The current ratio, a measure of the company's ability to meet its short-term obligations with its current assets, has steadily increased from 2.75 in 2021 to 3.12 in 2024. This indicates that the company's current assets are more than three times greater than its current liabilities, suggesting a strong liquidity position.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also shown improvement from 1.30 in 2022 to 1.64 in 2024. This suggests that the company has an adequate level of liquid assets to cover its short-term liabilities without relying on inventory, which may not be as easily convertible into cash.

The cash ratio, a stringent measure of liquidity that only considers cash and cash equivalents in relation to current liabilities, has fluctuated over the years but remained above 1.0, indicating that the company holds sufficient cash reserves to cover its short-term obligations.

Overall, Cavco Industries Inc's liquidity ratios paint a positive picture of the company's ability to meet its short-term financial obligations and suggest a strong liquidity position that has improved over the past five years.

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Additional liquidity measure

The cash conversion cycle of Cavco Industries Inc has fluctuated over the past five years. In the most recent fiscal year ending March 31, 2024, the company's cash conversion cycle was 71.13 days, showing a slight improvement from the preceding year. However, compared to the year ending March 31, 2020, there has been an increase in the cash conversion cycle.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter cash conversion cycle is generally more favorable as it indicates that the company is able to efficiently manage its working capital and turn sales into cash more quickly.

Cavco Industries Inc's cash conversion cycle performance may suggest that the company has been able to maintain a relatively stable cycle in recent years, but there may be opportunities for further improvement in managing working capital and optimizing cash flows in the future. Further analysis of the components of the cash conversion cycle, such as inventory turnover, accounts receivable days, and accounts payable days, could provide additional insights into the company's operational efficiency and financial performance.