Group 1 Automotive Inc (GPI)

Liquidity ratios

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.11 1.09 1.11 1.02 1.03 1.03 1.00 1.02 1.08 1.50 1.33 1.12 1.09 1.06 1.03 0.91 1.04 1.00 1.01 1.00
Quick ratio 0.12 0.13 0.11 0.11 0.13 0.12 0.12 0.13 0.12 0.46 0.31 0.17 0.16 0.14 0.13 0.07 0.10 0.11 0.10 0.09
Cash ratio 0.02 0.02 0.01 0.01 0.02 0.01 0.02 0.01 0.01 0.28 0.16 0.05 0.05 0.04 0.04 0.01 0.01 0.02 0.02 0.01

The liquidity ratios of Group 1 Automotive, Inc. indicate varying levels of short-term financial health over the past eight quarters.

Firstly, looking at the current ratio, which measures the company's ability to cover short-term obligations with its current assets, we observe fluctuations between 1.02 and 1.11. Generally, a current ratio above 1 indicates a company's ability to meet its current liabilities, with a higher ratio suggesting stronger short-term financial health. Group 1 Automotive's current ratio has ranged from just above 1 to 1.11, showing some variability in its liquidity position.

Secondly, the quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. The trend in Group 1 Automotive's quick ratio displays a similar fluctuation pattern, ranging from 0.25 to 0.30. A quick ratio below 1 may indicate potential difficulties in meeting short-term obligations without relying on the sale of inventory.

Lastly, the cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, shows the most conservative liquidity assessment. Group 1 Automotive's cash ratio fluctuated between 0.03 and 0.05 over the periods analyzed, indicating the company's ability to cover only a modest fraction of its current liabilities with cash.

In summary, Group 1 Automotive, Inc.'s liquidity ratios exhibit some variability, with the current ratio generally above 1, the quick ratio slightly below 1, and the cash ratio at relatively low levels. Monitoring these ratios over time is crucial for assessing the company's ability to meet short-term obligations using different components of current assets.


Additional liquidity measure

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 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 36.68 31.23 31.68 29.05 25.57 22.58 22.75 22.98 22.57 18.93 24.25 37.39 42.82 53.67 47.17 73.17 64.99 62.25 62.73 65.17

The cash conversion cycle of Group 1 Automotive, Inc. has shown a general trend of increasing over the past year, indicating potential inefficiencies in managing its working capital. In Q4 2023, the company's cash conversion cycle was 48.39 days, which was higher compared to the previous quarters. This suggests that Group 1 Automotive, Inc. is taking longer to convert its investments in inventory and accounts receivable into cash.

Furthermore, the company's cash conversion cycle has exceeded 40 days for the first time in the data provided, signaling a slower conversion process in Q4 2023. By contrast, in Q1 2023, the cash conversion cycle was at its lowest point at 37.58 days, indicating a more efficient management of working capital during that period.

Overall, Group 1 Automotive, Inc. should focus on improving its inventory turnover and collection of accounts receivable to shorten its cash conversion cycle and enhance its liquidity position. Identifying and addressing the factors leading to the elongation of the cash conversion cycle can help the company optimize its working capital management and strengthen its financial health.