Greenbrier Companies Inc (GBX)

The liquidity ratios of Greenbrier Cos., Inc. indicate its ability to meet short-term obligations and manage its working capital effectively. The current ratio, which measures the company's ability to cover short-term liabilities with short-term assets, shows a slight decline from 2.03 in 2022 to 1.86 in 2023. This suggests a reduction in the company's short-term liquidity position. The quick ratio, which excludes inventory from current assets, also exhibits a decreasing trend from 1.19 in 2022 to 1.03 in 2023, potentially indicating a decrease in the company's ability to meet immediate obligations without relying on inventory sales. Moreover, the cash ratio, which assesses the company's ability to cover current liabilities with its cash and cash equivalents, decreased from 0.65 in 2022 to 0.46 in 2023, reflecting a lower capacity to settle short-term obligations solely with cash reserves. Overall, the declining trend in these liquidity ratios may signal a reduction in Greenbrier Cos., Inc.'s short-term liquidity and ability to manage upcoming liabilities effectively. This highlights the importance of closely monitoring the company's working capital management and cash flow position.

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Additional liquidity measure

The cash conversion cycle (CCC) for Greenbrier Cos., Inc. has fluctuated over the past five years. The CCC measures the company's ability to convert its investment in inventory and accounts receivable into cash. A lower CCC indicates a more efficient cash management process.

In 2023, the CCC decreased to 97.42 days from 122.85 days in 2022, indicating an improvement in the company's efficiency in managing its working capital. This suggests that Greenbrier may have been able to reduce the time it takes to sell inventory and collect receivables, thereby improving its cash flow.

Comparing this to 2021, where the CCC was 161.65 days, demonstrates a significant decrease in the time it takes for the company to convert its working capital to cash. Similarly, in 2020 and 2019, the CCC was 88.27 and 94.56 days, respectively, showing that the company was more efficient in managing its cash conversion during those years.

The trend of decreasing CCC over the past two years is a positive signal, indicating that Greenbrier has been able to manage its working capital more effectively, potentially through improved inventory management and collections processes. These improvements in the cash conversion cycle can positively impact the company's liquidity and overall financial health.