Graco Inc (GGG)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.46 | 3.01 | 2.69 | 3.19 | 2.77 |
| Quick ratio | 2.26 | 1.71 | 1.87 | 2.16 | 1.71 |
| Cash ratio | 1.36 | 0.85 | 1.23 | 1.18 | 0.77 |
Graco Inc's liquidity ratios indicate the company's ability to meet short-term obligations and cover immediate expenses. The trend analysis of the current ratio shows a generally positive trajectory over the past five years, with an improvement from 2.77 in 2019 to 3.46 in 2023. This suggests that Graco Inc's current assets are sufficient to cover its current liabilities, demonstrating a strong liquidity position.
The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows improvement over the years. The ratio increased from 1.71 in 2019 to 2.26 in 2023, indicating that Graco Inc has a healthy level of liquid assets to meet its short-term obligations without relying on inventory sales.
Furthermore, the cash ratio, which focuses solely on cash and cash equivalents relative to current liabilities, shows a consistent improvement from 0.77 in 2019 to 1.36 in 2023. This indicates that Graco Inc has a solid ability to cover its obligations with cash on hand.
Overall, the liquidity ratios of Graco Inc demonstrate a strong and improving liquidity position over the past five years, providing confidence in the company's ability to honor its short-term financial commitments.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 188.09 | 190.85 | 176.01 | 174.04 | 161.00 |
The cash conversion cycle of Graco Inc has shown some fluctuation over the past five years. In 2023, the cash conversion cycle decreased to 188.09 days compared to 190.85 days in 2022, indicating a slight improvement in the company's efficiency in managing its working capital. However, this cycle was longer compared to 2021 when it was 176.01 days.
Graco Inc's cash conversion cycle has been increasing steadily since 2019 when it stood at 161.00 days. The upward trend suggests that the company may be taking longer to convert its investments in raw materials and inventory into cash from sales.
A longer cash conversion cycle can indicate potential issues with inventory management, collection of receivables, or the company's ability to effectively manage its working capital. It is important for Graco Inc to monitor and potentially optimize its cash conversion cycle to ensure efficient use of resources and improve its overall financial performance.