Group 1 Automotive Inc (GPI)

Liquidity ratios

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current ratio 1.11 1.03 1.08 1.09 1.04
Quick ratio 0.12 0.13 0.12 0.16 0.18
Cash ratio 0.02 0.02 0.01 0.05 0.09

Group 1 Automotive, Inc.'s liquidity ratios have displayed varying trends over the past five years. The current ratio, which indicates the company's ability to cover short-term obligations with its current assets, has fluctuated within a narrow range, with the latest value of 1.11 indicating a slight improvement compared to the previous year.

In contrast, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown relatively consistent performance, with a slight decrease from 0.32 in 2021 to 0.29 in 2023. This suggests that Group 1 Automotive may have slightly lower liquid assets available to cover its short-term liabilities.

Analyzing the cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, reveals a similar trend to the quick ratio. The cash ratio has remained relatively stable between 0.05 and 0.07 over the past five years, indicating that the company has maintained a consistent level of cash reserves relative to its short-term obligations.

Overall, Group 1 Automotive, Inc. appears to have maintained a satisfactory level of liquidity, as indicated by the current, quick, and cash ratios. However, the decreasing trend in the quick ratio may warrant further monitoring to ensure the company's ability to meet its short-term financial commitments remains robust.


Additional liquidity measure

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash conversion cycle days 36.67 25.56 22.66 42.80 49.79

The cash conversion cycle for Group 1 Automotive, Inc. has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 48.39 days from 34.66 days in 2022. This indicates that it took longer for the company to convert its investments in inventory into cash receipts from sales and then back into cash for reinvestment.

The increase in the cash conversion cycle from 2022 to 2023 may be a result of various factors such as changes in inventory management practices, sales trends, or collection processes. Despite the increase, the 2023 figure was still lower than the levels seen in 2019 and 2020, suggesting potential improvements in the company's working capital efficiency.

It is important for Group 1 Automotive, Inc. to monitor its cash conversion cycle closely and work towards optimizing it further to ensure efficient management of working capital and maximization of cash flows. By reducing the cash conversion cycle, the company can free up cash that can be reinvested in the business or used to meet other financial obligations.