Graham Holdings Co (GHC)

Liquidity ratios

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Current ratio 1.75 1.57 1.61 1.57 1.50 1.56 1.50 1.46 1.45 1.44 1.57 1.69 1.58 1.67 1.82 1.98 1.87 1.66 1.72 1.55
Quick ratio 0.93 0.81 0.84 0.75 0.73 0.72 0.70 0.66 0.67 0.67 0.77 0.91 0.83 0.89 0.98 1.15 1.05 0.88 0.86 0.67
Cash ratio 0.93 0.81 0.84 0.75 0.73 0.72 0.70 0.66 0.67 0.67 0.77 0.91 0.83 0.89 0.98 1.15 1.05 0.88 0.86 0.67

The analysis of Graham Holdings Co's liquidity ratios reveals a consistent and relatively stable current ratio over the period under review, ranging from 1.44 to 1.98. The current ratio reflects the company's ability to meet its short-term obligations with its current assets. An increasing trend in the current ratio generally indicates improved liquidity and financial health.

In contrast, the quick ratio, which measures the company's ability to cover its short-term liabilities with its most liquid assets, shows more variability over time, ranging from 0.66 to 1.15. Although the quick ratio generally remains above 1, indicating a sufficient level of liquidity, the downward trend in recent periods may suggest a slight decrease in the company's ability to meet its immediate obligations without relying on inventory.

Similarly, the cash ratio follows a similar pattern to the quick ratio, ranging from 0.66 to 1.15. This ratio provides insight into the company's ability to cover its current liabilities with its most liquid asset, cash. While the cash ratio also generally remains above 1, signifying a solid liquidity position, the slight decline in recent periods may indicate a need for closer monitoring of the company's cash reserves to ensure continued financial stability.

Overall, the analysis of Graham Holdings Co's liquidity ratios shows a reasonably healthy liquidity position, with the current ratio consistently above 1 and both the quick ratio and cash ratio generally above 1 as well. However, the variability in the quick and cash ratios in recent periods may warrant further investigation to understand the underlying factors impacting the company's liquidity position.

Additional liquidity measure

Dec 31, 2024 Sep 30, 2024 Jun 30, 2024 Mar 31, 2024 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
Cash conversion cycle days 31.88 32.90 35.51 36.92 34.58 34.06 32.57 32.45 31.15 30.60 27.61 25.32 24.42 17.81 23.25 25.60 23.05 23.46 22.47 20.98

The cash conversion cycle for Graham Holdings Co has shown fluctuations over the past several quarters, indicating changes in the efficiency of its cash management.

From March 31, 2020, to June 30, 2021, the cash conversion cycle ranged between approximately 20 to 25 days, demonstrating relatively stable cash conversion efficiency during this period. However, in the subsequent quarters from September 30, 2021, to December 31, 2024, the cash conversion cycle increased gradually to reach a peak of 36.92 days on March 31, 2024, before slightly decreasing in the last quarter.

A longer cash conversion cycle suggests that it takes the company more time to convert its investments in inventory back to cash. This could indicate inventory management issues, such as an excessive build-up of inventory that is not being sold promptly.

It is important for Graham Holdings Co to closely monitor and manage its cash conversion cycle to ensure optimal liquidity and working capital efficiency. Analyzing the drivers behind the fluctuations in the cash conversion cycle could help identify areas for improvement and implement necessary strategies to enhance cash flow and overall financial performance.