Acushnet Holdings Corp (GOLF)

Acushnet Holdings Corp's liquidity ratios have displayed some fluctuations over the years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, decreased from 2.24 in December 2020 to 1.93 in December 2022 before recovering to 2.06 in December 2024. This indicates a slight decline in the company's short-term liquidity position over the period.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Acushnet's quick ratio increased from 0.42 in December 2020 to 0.58 in December 2021, but then dropped significantly to 0.11 in December 2022 and remained at the same level in December 2024. The decreasing trend in the quick ratio suggests a potential challenge in meeting short-term obligations without relying on inventory sales.

The cash ratio, which is the most conservative measure of liquidity focusing solely on cash and cash equivalents to current liabilities, followed a similar pattern to the quick ratio. It increased from 0.42 in December 2020 to 0.58 in December 2021, but then declined to 0.11 in December 2022 and remained at that level in December 2024. This indicates that Acushnet Holdings Corp may have limited cash resources relative to its current liabilities, posing a liquidity risk.

In summary, while the current ratio of Acushnet Holdings Corp has shown some stability, the quick ratio and cash ratio have exhibited a downward trend, suggesting a potential liquidity challenge in meeting short-term obligations without relying on inventory or cash reserves. Investors and stakeholders may need to closely monitor the company's liquidity position and its ability to manage short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Acushnet Holdings Corp has shown some fluctuations over the years. As of December 31, 2020, the cash conversion cycle was 166.88 days, which decreased to 146.54 days by December 31, 2021. However, it increased significantly to 225.70 days by December 31, 2022, before slightly decreasing to 198.91 days by December 31, 2023. The most recent data available as of December 31, 2024, shows a decrease to 165.62 days.

Overall, the cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows. A shorter cash conversion cycle indicates more efficient management of working capital and faster conversion of assets into cash, which is generally favorable for the company's liquidity and operational efficiency. However, the fluctuating trend in Acushnet Holdings Corp's cash conversion cycle may indicate variability in its inventory management, payment collection, or supplier payment processes. Management should monitor and analyze these fluctuations to optimize working capital management and enhance overall financial performance.