Generac Holdings Inc (GNRC)

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 1.97 2.03 2.25 2.29 2.27 2.41 2.43 2.40 2.20 2.09 2.13 1.70 1.60 1.89 2.02 2.62 2.60 2.66 2.67 2.50
Quick ratio 0.86 0.86 0.91 0.86 0.84 0.83 0.78 0.69 0.66 0.70 0.99 0.65 0.60 0.92 1.04 1.65 1.61 1.64 1.48 1.28
Cash ratio 0.27 0.21 0.24 0.28 0.23 0.18 0.21 0.15 0.13 0.21 0.40 0.16 0.13 0.42 0.47 1.05 1.02 0.92 0.82 0.64

Generac Holdings Inc's Current Ratio, which measures the company's ability to cover its short-term liabilities with its assets, has been relatively stable over the past few years, ranging from a high of 2.67 in June 2020 to a low of 1.60 in December 2021. A ratio above 1 indicates that the company has more current assets than current liabilities, with a higher ratio generally considered favorable.

The Quick Ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, shows a declining trend for Generac Holdings Inc. The ratio decreased from a peak of 1.65 in March 2021 to a low of 0.60 in December 2021. This downward trend signals a potential decrease in the company's ability to meet its short-term obligations without relying on the sale of inventory.

Lastly, the Cash Ratio, which indicates the proportion of a company's current assets held in cash or cash equivalents, depicts a fluctuating pattern for Generac Holdings Inc. The ratio ranged from a low of 0.13 in December 2021 to a high of 1.05 in March 2021. A higher cash ratio suggests a stronger ability to cover current liabilities with cash on hand, indicating a greater financial strength.

Overall, while the Current Ratio reflects a relatively stable liquidity position for Generac Holdings Inc, the declining trend in the Quick Ratio and the fluctuating pattern in the Cash Ratio warrant further monitoring to ensure the company's ongoing ability to meet its short-term obligations.

See also:

Generac Holdings Inc Liquidity Ratios (Quarterly Data)

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 111.02 129.66 135.59 132.85 136.69 149.96 150.74 141.49 133.04 130.13 121.20 115.48 105.75 99.80 92.88 100.00 107.31 115.52 118.37 112.47

The cash conversion cycle of Generac Holdings Inc has shown fluctuations over the observed period. Starting at 112.47 days on March 31, 2020, the cycle increased to 150.74 days by June 30, 2023, before decreasing to 111.02 days by December 31, 2024. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.

A longer cash conversion cycle can indicate inefficiencies in managing working capital, potentially tying up cash that could be used for other purposes. Conversely, a shorter cycle may suggest effective management of inventory and receivables, leading to quicker cash inflows.

Generac's cash conversion cycle saw significant variations, possibly influenced by changes in inventory management, sales terms, or payment collection practices. Analyzing the reasons behind these fluctuations can provide insights into the company's operational efficiency and financial performance. Further monitoring of the trend in the cash conversion cycle will be essential to assess the ongoing effectiveness of Generac's working capital management.