Group 1 Automotive Inc (GPI)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.03 | 1.11 | 1.03 | 1.08 | 1.09 |
| Quick ratio | 0.01 | 0.02 | 0.02 | 0.01 | 0.05 |
| Cash ratio | 0.01 | 0.02 | 0.02 | 0.01 | 0.05 |
Group 1 Automotive Inc's liquidity ratios indicate the company's ability to meet its short-term obligations. Looking at the current ratio over the past five years, it has shown a slight fluctuation ranging from 1.03 to 1.11. The current ratio has hovered around 1, with a peak in 2023. This suggests that Group 1 Automotive Inc may have just enough current assets to cover its current liabilities.
However, when we examine the quick ratio and cash ratio, which are more stringent measures of liquidity, the trend is quite low and stable. The quick ratio and cash ratio have consistently remained very low, at around 0.01 to 0.02 over the past five years. This indicates that Group 1 Automotive Inc may struggle to meet its short-term obligations using only its most liquid assets.
Overall, Group 1 Automotive Inc's liquidity position appears to be on the weaker side given the low quick and cash ratios. Management should closely monitor liquidity levels to ensure the company can readily cover its immediate financial obligations.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 57.65 | 48.25 | 37.35 | 35.47 | 58.99 |
The cash conversion cycle of Group 1 Automotive Inc has exhibited some fluctuations over the past five years.
As of December 31, 2020, the company's cash conversion cycle stood at 58.99 days, indicating that it took roughly 59 days for the company to convert its investments in inventory and other resources into cash.
By December 31, 2021, the cash conversion cycle improved to 35.47 days, suggesting a more efficient management of working capital and faster cash generation.
The trend continued into December 31, 2022, with a slight increase to 37.35 days, still reflecting a relatively healthy operational efficiency.
However, by December 31, 2023, the cash conversion cycle increased to 48.25 days, signaling a potential slowdown in cash conversion efficiency compared to the previous year.
As of December 31, 2024, the cash conversion cycle further extended to 57.65 days, indicating a prolonged period for the company to realize cash from its operational activities.
In conclusion, while the cash conversion cycle of Group 1 Automotive Inc has shown some variability over the years, it is important for the company to focus on optimizing its working capital management to ensure efficient cash conversion and overall operational effectiveness.