Fastenal Company (FAST)

Based on the provided liquidity ratios for Fastenal Company over the years 2020 to 2024:

1. Current Ratio:
- Fastenal's current ratio has exhibited a consistently strong liquidity position, ranging from 3.96 to 4.67 over the five-year period.
- The current assets of the company have consistently been significantly higher than its current liabilities, indicating a healthy ability to cover short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, has shown a stable trend between 1.57 and 1.99 during the same period.
- This demonstrates Fastenal's ability to meet its short-term liabilities by utilizing its most liquid assets, excluding inventory.

3. Cash Ratio:
- Fastenal's cash ratio indicates the company's ability to cover its current liabilities with cash and cash equivalents alone.
- While there has been some fluctuation, the cash ratio has generally been within the range of 0.29 to 0.40, showing a reasonable level of liquidity maintained by the company.

Overall, Fastenal Company has maintained strong liquidity positions across these three key ratios, which suggests that the company has the ability to cover its short-term obligations effectively and manage its liquidity efficiently over the years analyzed.

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Additional liquidity measure

The cash conversion cycle for Fastenal Company has shown some fluctuations over the past five years.

As of December 31, 2020, the cash conversion cycle stood at 141.17 days. By the end of 2021, it had increased to 152.79 days, indicating a lengthening of the cycle. However, there was a slight improvement in efficiency as of December 31, 2022, with the cycle decreasing to 148.87 days.

The most significant improvement was observed by the end of 2023, where the cash conversion cycle decreased substantially to 132.90 days. This suggests that the company was able to manage its working capital more effectively, leading to a quicker conversion of resources into cash.

By the end of 2024, there was a slight increase in the cycle to 135.53 days, although it remained lower than the levels seen in 2021 and 2022. Overall, Fastenal Company has demonstrated a level of variability in its cash conversion cycle, with efforts towards improving efficiency evident in certain years. This metric is crucial for assessing the company's ability to efficiently manage its working capital and convert investments into cash.