Generac Holdings Inc (GNRC)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.97 | 2.27 | 2.20 | 1.60 | 2.60 |
| Quick ratio | 0.86 | 0.84 | 0.66 | 0.60 | 1.61 |
| Cash ratio | 0.27 | 0.23 | 0.13 | 0.13 | 1.02 |
Generac Holdings Inc's liquidity ratios have shown some fluctuations over the years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, decreased from 2.60 in 2020 to 1.60 in 2021 before improving to 2.27 in 2023. This ratio dipped slightly to 1.97 by the end of 2024, indicating a potential decrease in the company's short-term liquidity position compared to the prior year.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also followed a similar trend. It dropped from 1.61 in 2020 to 0.60 in 2021 before gradually increasing to 0.86 by the end of 2024. This suggests that Generac Holdings Inc's ability to meet its short-term obligations without relying on inventory improved over the years, even though it still remains relatively lower compared to 2020.
Lastly, the cash ratio, which specifically assesses the company's ability to cover current liabilities with its cash and cash equivalents, saw fluctuations but generally remained low. It decreased significantly from 1.02 in 2020 to 0.13 in 2021 and 2022 before showing some improvement to 0.27 by the end of 2024. This indicates that Generac Holdings Inc may have faced challenges in maintaining sufficient cash reserves to meet immediate obligations but has made progress in enhancing its cash position in recent years.
Overall, while Generac Holdings Inc's liquidity ratios have demonstrated some variability, with improvements in certain areas, the company may need to continue monitoring its liquidity position to ensure it can meet its short-term financial obligations effectively.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 111.02 | 137.00 | 133.32 | 105.89 | 107.49 |
Generac Holdings Inc's cash conversion cycle has shown variability over the years based on the data provided. The cash conversion cycle, which reflects how efficiently the company manages its working capital, decreased from 107.49 days in December 2020 to 105.89 days in December 2021, indicating an improvement in the company's ability to convert its resources into cash.
However, in the following years, the cash conversion cycle increased significantly, reaching 133.32 days in December 2022 and further rising to 137.00 days in December 2023. This upward trend suggests that Generac Holdings Inc might be facing challenges in managing its inventory, receivables, and payables effectively, leading to a longer period to convert these components into cash.
The cash conversion cycle decreased slightly to 111.02 days in December 2024, potentially indicating a partial improvement in the company's working capital management compared to the prior year. Overall, the analysis highlights the importance for Generac Holdings Inc to focus on optimizing its working capital processes to enhance efficiency and financial performance in the future.