Graham Holdings Co (GHC)

Graham Holdings Co.'s liquidity ratios indicate its ability to meet short-term obligations and cover immediate financial needs. The current ratio has fluctuated over the past five years, ranging from 1.45 to 1.87, averaging at 1.60. This ratio suggests that the company has $1.60 in current assets for every $1 in current liabilities, indicating a relatively healthy short-term financial position.

The quick ratio, also known as the acid-test ratio, has remained relatively stable, with values between 1.24 and 1.73. This ratio measures the company's ability to pay off short-term obligations without relying on inventory sales. Graham Holdings Co.'s quick ratio suggests that it can cover its immediate liabilities adequately.

Furthermore, the cash ratio, representing the most liquid assets to current liabilities, reflects Graham Holdings Co.'s cash position. The company's cash ratio has fluctuated between 0.76 and 1.14, with an average of 0.89. This indicates that the company has improved its ability to cover short-term liabilities with cash on hand over the years.

Overall, Graham Holdings Co.'s liquidity ratios demonstrate a generally stable and adequately liquid financial position, characterized by a decreasing trend in liquidity from 2020 to 2023. While the company's ability to meet short-term obligations remains sound, management may need to keep monitoring and managing liquidity effectively to ensure continued financial stability.

---

Additional liquidity measure

The cash conversion cycle for Graham Holdings Co. has shown a declining trend over the past five years, indicating improved efficiency in managing its working capital. The cycle has decreased from 98.69 days in 2019 to 60.77 days in 2023.

A lower cash conversion cycle suggests that the company is able to convert its investments in inventory and receivables into cash more quickly. This could be a result of better inventory management, faster collection of receivables, or increased payment terms from suppliers.

The decreasing trend in the cash conversion cycle is a positive sign as it reflects the company's ability to generate cash flows more rapidly, potentially leading to reduced working capital requirements and improved liquidity. It also indicates effective management of operating cycle components, ultimately boosting the company's overall financial performance.