Brinker International Inc (EAT)

Brinker International Inc.'s liquidity ratios over the period from June 2021 to June 2025 indicate a predominantly constrained liquidity position with relatively low ratios throughout, reflecting the company's limited short-term liquidity buffer.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, remained consistently low, fluctuating narrowly between 0.31 and 0.38. Specifically, the ratio was 0.36 in both June 2021 and June 2022, declining slightly to 0.34 in June 2023, before increasing marginally to 0.38 in June 2024. However, it decreased again to 0.31 in June 2025. These values suggest that the company has less than one dollar of current assets for every dollar of current liabilities, indicating a potential difficulty in covering short-term liabilities solely with readily available assets.

The quick ratio, which adjusts the current ratio by excluding inventories—considered less liquid—shows an even more constrained liquidity profile. The ratio was 0.20 in June 2021, decreasing to 0.15 in June 2022 and further declining to 0.14 in June 2023. In June 2024, the quick ratio increased to 0.20, but by June 2025, it dropped to 0.00, indicating a significant deterioration in the company's ability to meet immediate obligations with its most liquid assets, excluding inventories.

Similarly, the cash ratio, which further narrows liquidity assessments to cash and cash equivalents, remained very low throughout the period. It was 0.04 in June 2021, halving to 0.02 in June 2022, and slightly increasing to 0.03 in June 2023. In June 2024, the cash ratio experienced an increase to 0.10, but it again dropped to 0.00 by June 2025, supporting a narrative of minimal cash holdings relative to short-term liabilities.

Overall, the analysis indicates that Brinker International Inc. has maintained low liquidity ratios throughout the analyzed period. These ratios reflect a limited capacity to cover short-term obligations without relying on additional sources of liquidity or asset conversion, which could suggest potential liquidity management challenges. The transient improvements in certain ratios in 2024 did not sustain into 2025, where ratios again approached critically low levels.

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Additional liquidity measure

The cash conversion cycle (CCC) of Brinker International Inc has demonstrated significant variability over the analyzed period from June 30, 2021, to June 30, 2025. Initially, on June 30, 2021, the CCC stood at 3.70 days, indicating a modest cycle where the company took approximately three to four days to convert its investments in inventory and receivables into cash, after accounting for its payables.

Over the subsequent year, the CCC decreased substantially to 2.03 days by June 30, 2022, reflecting an improvement in operational efficiency and a shortening of the time span for converting resource investments into cash inflows. This trend continued into 2023, with the CCC further reducing to 1.80 days as of June 30, 2023, suggesting ongoing efficiencies in working capital management and possibly faster collection periods or inventory turnover.

A notable development is observed in the fiscal year ending June 30, 2024, when the CCC turned negative at -1.96 days. A negative CCC implies that the company receives cash from sales before it needs to settle its payables, indicative of highly effective receivables management and extended payables periods. This scenario can be advantageous, as it effectively allows the company to finance its operations through supplier credit, thereby improving liquidity and reducing reliance on external financing.

By June 30, 2025, the CCC approximates to zero, at 0.00 days, denoting a balance point where the company’s cash inflows and outflows related to the core operating cycle are nearly synchronized. This equilibrium suggests optimal working capital management, minimizing the time gap between cash expenditures and receipts.

Overall, the trend in Brinker International Inc’s cash conversion cycle over the specified period illustrates a trajectory toward heightened efficiency and better working capital optimization. The shift into negative and near-zero territory underscores the company’s improved ability to generate cash more rapidly relative to its payables, enhancing liquidity and operational flexibility.