Granite Construction Incorporated (GVA)

Granite Construction Inc.'s liquidity ratios have shown some fluctuations over the past five years.

The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been relatively stable, ranging from 1.54 to 1.71. The current ratio was lowest in 2020 at 1.54 and highest in 2021 at 1.71, indicating the company's improved ability to meet its short-term liabilities in 2021 compared to previous years.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Granite Construction Inc.'s quick ratio has varied from 1.28 to 1.58 over the past five years. The company showed the weakest liquidity position in 2021 with a quick ratio of 1.28, while it improved to 1.58 in 2022, suggesting a more favorable ability to meet short-term obligations without relying on selling off inventory.

The cash ratio, which is the most conservative liquidity measure, focuses solely on cash and cash equivalents to cover short-term liabilities. Granite Construction Inc.'s cash ratio ranged from 0.85 to 1.00 over the five-year period. The company had the highest cash ratio in 2022 at 1.00, indicating a strong liquidity position solely based on cash reserves.

In conclusion, Granite Construction Inc.'s liquidity ratios have shown variability over the years, with the current ratio and cash ratio generally improving in 2021 and 2022, while the quick ratio fluctuated. Overall, the company appears to have maintained a satisfactory level of liquidity to meet its short-term obligations.

---

Additional liquidity measure

The cash conversion cycle of Granite Construction Inc. has fluctuated over the past five years, ranging from 20.48 days in 2022 to 26.57 days in 2023. The cash conversion cycle is a measure of how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

A lower cash conversion cycle indicates that the company is able to efficiently manage its working capital, as it can quickly convert its resources into cash. In 2022, Granite Construction Inc. had the lowest cash conversion cycle of 20.48 days, suggesting that the company was efficient in managing its working capital and generating cash flows from its operations.

On the other hand, the increase in the cash conversion cycle to 26.57 days in 2023 may indicate a potential slowdown in the company's ability to convert its investments into cash. This could be a result of factors such as a decrease in sales, longer payment terms with suppliers, or an increase in inventory levels.

Overall, Granite Construction Inc. should closely monitor its cash conversion cycle and work towards optimizing its working capital management to ensure efficient operations and maintain healthy cash flows.