Fox Factory Holding Corp (FOXF)

The current ratio of Fox Factory Holding Corp has shown a slight decline from 3.52 in 2020 to 2.80 in 2024, indicating a decrease in short-term liquidity. However, the current ratio has generally remained above 2, reflecting that the company's current assets continue to comfortably cover its current liabilities.

On the other hand, the quick ratio has displayed a more significant downward trend from 1.49 in 2020 to 0.28 in 2024, suggesting a potential strain on the firm's ability to meet its short-term obligations with its most liquid assets. This declining trend may raise concerns about the company's ability to handle immediate payment requirements.

Additionally, the cash ratio mirrors the performance of the quick ratio, also declining from 1.49 in 2020 to 0.28 in 2024. This indicates that the company's cash and cash equivalents may not be sufficient to cover its current liabilities, heightening the risks associated with its short-term financial obligations.

Overall, the decreasing trend in both the quick ratio and the cash ratio raises concerns about Fox Factory Holding Corp's short-term liquidity position, warranting further investigation into the company's liquidity management strategies and ability to meet its near-term financial obligations.

---

Additional liquidity measure

Over the past five years, Fox Factory Holding Corp's cash conversion cycle has exhibited a notable trend of increasing from 77.18 days as of December 31, 2020, to 152.24 days as of December 31, 2024. This indicates that the company is taking longer to convert its investments in inventory back into cash.

The cash conversion cycle is a measure of how efficiently a company manages its working capital. A longer cycle suggests that Fox Factory may be experiencing challenges in efficiently managing its inventory, collecting receivables, or delaying payments to suppliers.

This trend could indicate potential issues such as excessive inventory levels that are not selling quickly, slower collections from customers, or stretched payment terms with suppliers. Fox Factory may need to evaluate its operational processes to improve efficiency and optimize its cash flow management.

Overall, the increasing cash conversion cycle for Fox Factory Holding Corp warrants further investigation to identify the underlying factors contributing to this trend and to implement appropriate strategies to enhance working capital management and liquidity.