Green Brick Partners Inc (GRBK)

The liquidity ratios of Green Brick Partners Inc illustrate its ability to meet short-term obligations and operational needs.

1. Current Ratio: The current ratio indicates the company's ability to cover its short-term liabilities with its current assets. The ratio has shown a decreasing trend from 13.17 in 2020 to 8.93 in 2023, before experiencing a significant increase to 35.34 in 2024. A current ratio above 1 suggests that the company has more than enough current assets to cover its short-term liabilities.

2. Quick Ratio: The quick ratio measures the company's ability to meet its short-term obligations using its most liquid assets. The ratio has also demonstrated an increasing trend from 0.29 in 2020 to 2.37 in 2024. A quick ratio of at least 1 is generally considered healthy, indicating that the company can cover its short-term liabilities without relying on inventory sales.

3. Cash Ratio: The cash ratio specifically assesses the company's ability to cover its short-term liabilities with its cash and cash equivalents. Similar to the quick ratio, the cash ratio has shown an increasing trend from 0.29 in 2020 to 2.37 in 2024. A higher cash ratio indicates a stronger ability to meet short-term obligations without relying on other current assets.

In conclusion, the liquidity ratios of Green Brick Partners Inc have generally exhibited favorable trends, with increasing quick and cash ratios indicating improved ability to meet short-term obligations. However, the significant fluctuation in the current ratio, especially the substantial increase in 2024, may warrant further investigation to understand the underlying factors driving these changes.

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Additional liquidity measure

The cash conversion cycle for Green Brick Partners Inc has been showing a gradual increase over the years, starting at 415.81 days on December 31, 2020 and reaching 506.85 days by December 31, 2024. This trend indicates a lengthening of the time it takes for the company to convert its investments in inventory and other resources into cash. The increase in the cash conversion cycle suggests potential inefficiencies in the company's working capital management or possible challenges in converting its operating cycle into cash inflows. Monitoring and managing this cycle effectively is essential for maintaining liquidity and operational efficiency.