Fox Factory Holding Corp (FOXF)

Fox Factory Holding Corp's liquidity ratios have shown some fluctuations over the past five years.

The current ratio, a measure of the company's ability to cover its short-term liabilities with its current assets, has generally been above 3, indicating a strong ability to meet its short-term obligations. However, there was a slight decrease in 2022 before bouncing back in 2023. This suggests that the company has a healthy level of current assets relative to its current liabilities.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also been relatively strong ranging from 1.23 to 2.22 over the five-year period. While there was a significant drop in the quick ratio in 2020, the ratio improved in the following years. This indicates that the company has a sufficient level of liquid assets to cover its short-term liabilities without relying on inventory.

The cash ratio, the most conservative measure of liquidity, has fluctuated more significantly compared to the other ratios. It dropped sharply in 2020 but recovered in the subsequent years. The cash ratio in 2023 indicates that the company's cash reserves are at a relatively lower level compared to the previous years.

Overall, Fox Factory Holding Corp has maintained a strong liquidity position over the years, as evidenced by its current ratio consistently above 3 and its quick ratio generally above 1. However, the downward trend in the cash ratio warrants attention as it may indicate a decrease in the company's ability to cover its short-term obligations solely using cash reserves. The company should continue monitoring and managing its liquidity position to ensure it can meet its financial obligations in the future.

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Additional liquidity measure

The cash conversion cycle for Fox Factory Holding Corp has shown variability over the past five years. In 2023, the cash conversion cycle increased to 119.27 days compared to the previous year. This indicates that on average, it takes the company 119.27 days to convert its investments in inventory and other resources into cash inflows from sales.

The trend in the cash conversion cycle over the past five years shows that there was a significant increase from 2019 to 2020, followed by fluctuations in 2021 and 2022, and then a notable increase in 2023. A longer cash conversion cycle can suggest inefficiencies in managing working capital, inventory, and accounts receivable.

The increase in the cash conversion cycle in 2023 compared to the previous year may indicate challenges in converting resources into cash efficiently. It is essential for Fox Factory Holding Corp to assess and improve its operating cycle, inventory management, and accounts receivable processes to shorten the cash conversion cycle and enhance liquidity and operational efficiency.