Granite Construction Incorporated (GVA)

Liquidity ratios

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Current ratio 1.66 1.60 1.69 1.71 1.54
Quick ratio 0.70 0.61 0.65 0.55 0.66
Cash ratio 0.70 0.61 0.65 0.55 0.66

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

1. Current Ratio: The company's current ratio has ranged from 1.54 to 1.71, indicating that Granite Construction has generally maintained a healthy level of current assets to cover its current liabilities. A ratio above 1 suggests that the company has sufficient current assets to meet its short-term obligations.

2. Quick Ratio: The quick ratio has fluctuated between 0.55 and 0.70, which is lower than the ideal ratio of 1. This indicates that a significant portion of Granite Construction's current assets are tied up in inventory and may not be easily converted to cash to meet immediate liabilities.

3. Cash Ratio: The cash ratio has also varied between 0.55 and 0.70. This ratio signifies the company's ability to cover its current liabilities using only its cash and cash equivalents. The numbers suggest that Granite Construction has a moderate level of cash reserves relative to its short-term obligations.

Overall, while the current ratio indicates a satisfactory level of liquidity, the quick and cash ratios suggest that Granite Construction may have limited ability to quickly meet its short-term financial commitments without relying on inventory or other current assets. It is essential for the company to closely monitor and manage its liquidity position to ensure it can meet its obligations in a timely manner.


Additional liquidity measure

Dec 31, 2024 Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020
Cash conversion cycle days 11.49 12.18 10.81 8.36 9.34

Granite Construction Incorporated's cash conversion cycle has shown some fluctuation over the past five years. In December 31, 2020, the company had a cash conversion cycle of 9.34 days, indicating that it took approximately 9.34 days for the company to convert its investments in inventory and accounts receivable into cash.

By December 31, 2021, Granite Construction Incorporated managed to improve its cash conversion cycle to 8.36 days, highlighting more efficiency in managing its working capital. However, there was a reversal in trend by December 31, 2022, when the cash conversion cycle increased to 10.81 days, suggesting potential delays in converting investments back into cash.

The year ending December 31, 2023 saw a further increase in the cash conversion cycle to 12.18 days, indicating a longer period required to complete the cash conversion process. Finally, by December 31, 2024, the cash conversion cycle decreased slightly to 11.49 days, still higher compared to previous years.

Overall, Granite Construction Incorporated's cash conversion cycle has shown some variability over the years, with periods of improvement followed by setbacks. It is important for the company to focus on optimizing its working capital management to ensure a more consistent and efficient cash conversion cycle.