Hayward Holdings Inc (HAYW)

Hayward Holdings Inc's liquidity ratios have shown a positive trend over the past three years, reflecting an improvement in the company's ability to meet its short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, has increased from 2.47 in 2021 to 2.63 in 2022 and further to 3.02 in 2023. This indicates that Hayward Holdings Inc has a sufficient level of current assets to meet its current liabilities, with a stronger ability in the most recent year.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Hayward Holdings Inc's quick ratio has shown a fluctuating trend, improving from 1.70 in 2021 to 1.41 in 2022, and then significantly increasing to 2.13 in 2023. This suggests that the company has an increased ability to cover its short-term obligations using its most liquid assets.

The cash ratio, which measures the company's ability to pay off its current liabilities with its cash and cash equivalents, has also demonstrated improvement over the three years. The cash ratio has increased from 1.02 in 2021 to 0.40 in 2022, and then notably increased to 0.95 in 2023. This indicates that Hayward Holdings Inc has a higher proportion of cash to cover its short-term obligations in the most recent year.

Overall, the increasing trend in all three liquidity ratios suggests that Hayward Holdings Inc has enhanced its liquidity position and is better equipped to meet its short-term financial obligations as of December 31, 2023.

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Additional liquidity measure

The cash conversion cycle of Hayward Holdings Inc has shown an increasing trend over the past three years. In 2021, the company had a cash conversion cycle of 125.62 days, which increased to 182.51 days in 2022, and further rose to 206.84 days in 2023.

A longer cash conversion cycle indicates that the company is taking more time to convert its investments in inventory and accounts receivable into cash from sales. This can indicate potential liquidity challenges or inefficiencies in managing working capital.

Hayward Holdings Inc should focus on optimizing its inventory management, collection of accounts receivable, and payment of accounts payable to shorten its cash conversion cycle and improve its overall cash flow and liquidity position. Further analysis of the components of the cash conversion cycle, such as days inventory outstanding, days sales outstanding, and days payable outstanding, may provide insights into specific areas for improvement.