Brinker International Inc (EAT)

Brinker International Inc's liquidity ratios have displayed a consistent trend over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with current assets, has been decreasing steadily from 0.45 in 2020 to 0.38 in 2024. This indicates a potential weakening of the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also exhibited a declining trend from 0.26 in 2020 to 0.20 in 2024. The quick ratio below 1 indicates that Brinker International may struggle to meet its short-term liabilities without relying on selling inventory.

The cash ratio, which reflects the proportion of current liabilities that could be paid off with cash on hand, has fluctuated over the years but has generally been low. The ratio has ranged from 0.02 in 2022 to 0.10 in 2024, suggesting that Brinker International may have limited cash reserves to cover its immediate obligations.

Overall, the liquidity ratios for Brinker International Inc highlight potential concerns regarding the company's ability to efficiently meet its short-term financial obligations. Management may need to focus on improving liquidity by increasing cash reserves or efficiently managing current assets to enhance the company's financial health.

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Additional liquidity measure

The cash conversion cycle of Brinker International Inc has shown fluctuations over the past five years. The company's ability to convert its resources effectively has generally improved from -13.06 days in 2020 to -23.42 days in 2024.

A negative cash conversion cycle indicates that the company is efficiently managing its working capital, suggesting that it takes less time to convert its inventory into cash and collect receivables compared to the time it takes to pay its suppliers. This negative cycle can be advantageous as it allows the company to generate cash quickly.

In 2024, the cash conversion cycle of -23.42 days signifies that Brinker International Inc is efficient in managing its cash, inventory, and receivables. This improvement over the years could indicate effective inventory management, prompt receivables collection, and optimization of payables.

Overall, the trend of decreasing cash conversion cycle reflects positively on Brinker International Inc's financial efficiency and working capital management, indicating that the company is operating effectively in converting resources into cash.