ELF Beauty Inc (ELF)

ELF Beauty Inc's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 2.81 in 2023 to 1.59 in 2024. This suggests that the company may have slightly weaker liquidity position in 2024 compared to the previous year, but still has enough current assets to cover its short-term liabilities.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. ELF Beauty Inc's quick ratio decreased from 1.75 in 2023 to 0.78 in 2024. This significant decline may indicate potential difficulties in meeting immediate obligations without relying on inventory, signaling a more strained liquidity position in 2024.

Furthermore, the cash ratio, which measures the proportion of current liabilities that could be paid with cash and cash equivalents, also decreased from 1.12 in 2023 to 0.36 in 2024. This declining trend indicates a decreasing ability to cover short-term obligations solely with cash on hand, raising concerns about the company's liquidity position for the year.

Overall, while ELF Beauty Inc's liquidity ratios have shown some fluctuations over the years, the downward trend in 2024 for the current ratio, quick ratio, and cash ratio may suggest a slightly weaker liquidity position compared to previous years. It is essential for the company to closely monitor its liquidity position and take necessary steps to ensure it maintains sufficient liquidity to meet its short-term obligations effectively.

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See also:

ELF Beauty Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of ELF Beauty Inc has shown fluctuations over the past five years. In the most recent fiscal year ending March 31, 2024, the company's cash conversion cycle was at 89.57 days, showing an increase from the previous year. This indicates that it took the company approximately 89.57 days to convert its investments in inventory into cash receipts from customers.

Comparing this to previous years, the cash conversion cycle was lower in fiscal years 2023, 2021, and 2020, suggesting more efficient management of inventory and accounts receivable during those periods. However, in fiscal year 2022, the cash conversion cycle was significantly higher at 107.05 days, indicating a potential inefficiency in managing cash flow and working capital.

Overall, ELF Beauty Inc's cash conversion cycle has fluctuated over the years, and it is important for the company to closely monitor and manage its working capital components to improve efficiency in converting investments into cash inflows.