Green Plains Renewable Energy Inc (GPRE)

The liquidity ratios of Green Plains Inc, as reflected in the data from 2019 to 2023, provide insights into the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has fluctuated over the years. In 2021, the ratio was relatively high at 2.37, indicating that Green Plains had a strong ability to meet its short-term obligations. However, the ratio decreased in 2022 and 2023, although it remained above 1, which is generally considered acceptable.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also fluctuated over the years. The ratio was highest in 2021 at 1.52, signaling a good ability to cover short-term liabilities without relying on inventory. However, the ratio decreased in 2022 and 2023, underscoring a potential decrease in the company's ability to meet immediate obligations without selling inventory.

The cash ratio, the most stringent measure of liquidity that focuses solely on cash and cash equivalents to cover short-term liabilities, also showed variability over the years. The cash ratio was highest in 2021 at 1.26, suggesting that Green Plains had a strong liquidity position in terms of cash holdings. While the ratio decreased in 2022 and 2023, it remained above 1, indicating that the company had sufficient cash on hand to meet its immediate obligations.

Overall, Green Plains Inc has maintained a relatively sound liquidity position over the years, with current, quick, and cash ratios generally above 1. However, the fluctuations in these ratios suggest a need for continued monitoring to ensure the company's ability to meet short-term financial commitments remains stable.

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Additional liquidity measure

The cash conversion cycle of Green Plains Inc has shown fluctuations over the past five years, indicating variations in the efficiency of its working capital management. In 2023, the company's cash conversion cycle decreased to 13.98 days from 15.57 days in 2022, suggesting an improvement in its ability to convert inventory and receivables into cash. This trend aligns with a more streamlined operational process or effective inventory management.

Comparing to 2021 and 2020, where the cash conversion cycle was at 32.54 days and 36.74 days respectively, the significant decrease in 2023 indicates a more efficient cash flow management system. It is worth noting that in 2020, the company had a longer cash conversion cycle, potentially indicating operational inefficiencies or difficulties in managing inventory and receivables during that period.

Furthermore, the cash conversion cycle in 2019 was 31.86 days, slightly longer than in 2023, suggesting that the company has improved its working capital efficiency over the past five years. Overall, the decreasing trend in the cash conversion cycle demonstrates Green Plains Inc's efforts to enhance its working capital management, which can positively impact its financial performance and liquidity position.