National Vision Holdings Inc (EYE)

The liquidity ratios of National Vision Holdings Inc show mixed results over the past few years.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been relatively stable, ranging from 1.00 to 1.85. A current ratio above 1 indicates that the company has sufficient current assets to cover its current liabilities, with a higher ratio considered more favorable. The current ratio of 1.00 at the end of December 2023 is on the lower side compared to previous periods, indicating tighter liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measurement of liquidity by excluding inventory from current assets. This ratio has fluctuated more significantly, ranging from 0.14 to 1.26. A quick ratio below 1 may indicate potential difficulty in meeting short-term obligations without relying on inventory sales. The quick ratio of 0.60 at the end of December 2023 indicates a relatively lower liquidity position compared to previous quarters.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its current liabilities with its cash and cash equivalents alone. This ratio has varied between 0.14 and 1.26. A cash ratio below 1 suggests that the company may need to rely on other current assets or sources to meet its short-term obligations. The cash ratio of 0.38 at the end of December 2023 indicates a limited ability to cover current liabilities solely with cash and cash equivalents.

Overall, the liquidity ratios of National Vision Holdings Inc have shown some volatility, with the company demonstrating varying degrees of liquidity over the periods analyzed. Management should closely monitor these ratios to ensure the company maintains an adequate level of liquidity to meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle for National Vision Holdings Inc has shown some variability over the past few quarters. The company's cash conversion cycle is a measure of how long it takes for the company to convert its investments in inventory and other resources into cash flow from sales.

The trend in the cash conversion cycle for National Vision Holdings Inc indicates that the company has experienced fluctuations in the efficiency of its working capital management. A lower number of days in the cash conversion cycle is generally preferable as it suggests that the company is able to quickly convert its investments into cash.

In the most recent quarter, the cash conversion cycle was 24.97 days, which increased from the previous quarter's 25.46 days. This indicates a slight deterioration in the company's efficiency in managing its working capital during this period.

It is worth noting that there were significant improvements in the efficiency of the cash conversion cycle in some quarters, such as in March 2020 and September 2020, where the company saw much lower days in the cycle. However, there have also been periods of higher days in the cash conversion cycle, like in December 2019 and September 2019.

Overall, National Vision Holdings Inc should continue monitoring and managing its working capital effectively to maintain a healthy cash conversion cycle, which can help improve liquidity and overall financial performance in the long run.