Frontdoor Inc (FTDR)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.10 | 1.18 | 1.07 | 0.96 | 0.91 | 0.88 | 0.77 | 0.70 | 0.78 | 0.98 | 0.84 | 1.31 | 1.55 | 1.51 | 1.39 | 1.28 | 1.27 | 1.31 | 1.13 |
| Quick ratio | 1.00 | 0.92 | 0.98 | 0.88 | 0.83 | 0.64 | 0.68 | 0.65 | 0.71 | 0.80 | 0.77 | 1.23 | 1.49 | 1.36 | 1.34 | 1.24 | 1.23 | 1.18 | 1.10 |
| Cash ratio | 0.98 | 0.90 | 0.96 | 0.86 | 0.82 | 0.63 | 0.67 | 0.63 | 0.69 | 0.78 | 0.76 | 1.23 | 1.48 | 1.34 | 1.31 | 1.22 | 1.20 | 1.16 | 1.07 |
Frontdoor Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its current liabilities with its current assets, has been showing improvement over the quarters, reaching 1.10 in Q4 2023 from a low of 0.70 in Q1 2022. This trend suggests that Frontdoor Inc. has been better positioned to meet its short-term obligations.
The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, also exhibited a similar trend of improvement, mirroring the current ratio figures. This indicates that Frontdoor Inc. can cover its current liabilities even without relying on inventory, which is a positive sign of liquidity management.
Furthermore, the cash ratio, which specifically measures the company's ability to cover its current liabilities with cash and cash equivalents, also improved over the quarters, reflecting a strengthening position in terms of immediate liquidity needs. The cash ratio reached 1.08 in Q4 2023, up from 0.69 in Q1 2022.
Overall, the improving trend in all three liquidity ratios suggests that Frontdoor Inc. has been managing its liquidity effectively and has become more capable of meeting its short-term financial obligations as time progressed.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -29.76 | -33.79 | -29.70 | -30.47 | -29.57 | -22.03 | -27.90 | -30.48 | -27.89 | -33.35 | -35.69 | -15.64 | -25.28 | -31.89 | -35.83 | -26.91 | -22.53 | -27.26 | -28.54 |
Frontdoor Inc.'s cash conversion cycle has shown relatively stable performance over the past eight quarters, with a range between -29.70 days to -37.65 days. The negative values signify that the company is efficient in converting its resources into cash, indicating a strong liquidity position.
On average, the company takes around 30 days to convert its investments in inventory and accounts receivable into cash. This rapid conversion cycle suggests effective management of working capital and swift realization of revenues.
The consistent negative trend in the cash conversion cycle indicates that Frontdoor Inc. has adeptly managed its operating cycle, minimizing the time it takes to convert its assets into cash without compromising its ability to generate revenue. This efficiency in cash conversion is a positive indicator of the company's financial health and operational efficiency.