Six Flags Entertainment Corporation (FUN)

The current ratio of Six Flags Entertainment Corporation has exhibited fluctuations over the analyzed period. It started low at 0.52 in March 31, 2020, improved significantly to reach 1.85 by December 31, 2020, and then fluctuated around 1.00 for the next few quarters before dropping to 0.40 by September 30, 2024. The current ratio measures the company's ability to cover its short-term obligations with its current assets. A ratio below 1.00 may indicate potential liquidity issues as current liabilities exceed current assets.

The quick ratio, which provides a more stringent assessment of liquidity by excluding inventory from current assets, also showed variability for Six Flags. It fluctuated significantly, ranging from a low of 0.08 on March 31, 2023, to a high of 1.35 on September 30, 2021. This ratio gives a clearer picture of the company's ability to meet its short-term liabilities without relying on selling inventory. A quick ratio below 1.00 suggests potential difficulties in meeting immediate obligations.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, also displayed fluctuations for Six Flags over the analyzed period. This ratio ranged from a low of 0.08 on March 31, 2024, to a high of 1.35 on September 30, 2021. A cash ratio below 1.00 indicates that the company may have challenges in paying off its short-term liabilities with its available cash reserves alone.

Overall, the liquidity ratios of Six Flags Entertainment Corporation have shown variability, with periods of strength and weakness in its ability to meet its short-term financial obligations. It is essential for stakeholders to closely monitor these ratios to assess the company's liquidity position and its ability to weather potential financial challenges.

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Additional liquidity measure

The cash conversion cycle of Six Flags Entertainment Corporation has shown significant fluctuations over the periods indicated in the data. The company's cash conversion cycle is a metric that measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

Analyzing the trend in the cash conversion cycle, we observe that the company experienced an increase in the cycle from March 2020 to a peak in March 2021 at 732.75 days, indicating a prolonged period to convert investments into cash. This elongated cycle may suggest issues with inventory management, sales collection, or other operational inefficiencies during this period.

However, from June 2021 onwards, we see a significant improvement in the cash conversion cycle, with a steady decline in the number of days required to convert investments into cash. By December 2024, the cash conversion cycle has reduced to just 10.56 days, reflecting a more efficient process of converting resources into cash flows.

The decreasing trend in the cash conversion cycle from 2021 to 2024 is a positive sign, indicating that the company has been able to streamline its operations, improve inventory turnover, and enhance collections from sales. This trend suggests that Six Flags Entertainment Corporation has made improvements in its working capital management, leading to quicker conversions of investments into cash over time.