Green Brick Partners Inc (GRBK)

Green Brick Partners Inc's liquidity ratios have shown significant improvement over the past five years.

The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Green Brick Partners Inc's current ratio has been consistently strong, increasing from 3.18 in 2019 to 8.52 in 2023. This indicates that the company has a high level of current assets relative to current liabilities, which suggests a solid ability to meet its short-term obligations.

The quick ratio, which excludes inventory from current assets, provides a more conservative measure of liquidity. Green Brick Partners Inc's quick ratio has also improved markedly over the years, rising from 0.15 in 2019 to 0.93 in 2023. This shows that the company has an increasing ability to meet its short-term obligations without relying on selling inventory.

Lastly, the cash ratio, which is the most stringent measure of liquidity, focuses solely on cash and cash equivalents to cover current liabilities. Green Brick Partners Inc's cash ratio has experienced a similar upward trend, going up from 0.13 in 2019 to 0.88 in 2023. This suggests that the company has a growing capacity to pay off its short-term debts using only its available cash resources.

Overall, Green Brick Partners Inc's liquidity ratios indicate a strong financial position with ample liquidity to meet its short-term obligations while also suggesting increasing efficiency in managing its current assets and liabilities.

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Additional liquidity measure

The cash conversion cycle of Green Brick Partners Inc has shown fluctuations over the past five years. The company's cash conversion cycle was 441.21 days at the end of 2023, representing an increase from the previous year. This indicates that, on average, it takes Green Brick Partners Inc 441.21 days to convert its investments in inventory and other resources back into cash from sales.

Compared to 2022, the increase in the cash conversion cycle in 2023 suggests that Green Brick Partners Inc may be taking longer to sell its inventory, collect receivables, or pay off payables, which could tie up cash in its operations.

However, over the past five years, the cash conversion cycle has shown some variability. While it increased in 2023, it was relatively stable in the previous years, ranging from 405.70 days to 426.36 days.

It is crucial for Green Brick Partners Inc to monitor and manage its cash conversion cycle effectively as a longer cycle can indicate inefficiencies in managing working capital, potentially resulting in cash flow challenges or increased financing costs. This analysis underscores the importance of assessing and optimizing the company's operational and financial processes to improve cash flow efficiency.