Hanesbrands Inc (HBI)

Hanesbrands Inc's liquidity ratios indicate its ability to meet short-term obligations and maintain financial flexibility. The current ratio, which measures the company's ability to cover its current liabilities with current assets, has been relatively stable over the years, ranging from 1.37 to 1.75. A current ratio above 1 indicates that the company has more current assets than liabilities, which is generally considered healthy.

In contrast, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, shows a decreasing trend from 0.43 in 2020 to 0.17 in 2024. This declining trend suggests potential challenges in meeting short-term obligations without relying on inventory.

The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, also shows a decreasing trend over the years. Although the cash ratio is generally lower than the current and quick ratios, a decreasing trend may indicate reduced liquidity and ability to quickly cover obligations with cash on hand.

Overall, while Hanesbrands Inc's current ratio indicates a relatively healthy liquidity position, the declining trend in the quick and cash ratios over the years may suggest a need for the company to monitor its liquidity more closely and potentially take actions to improve its short-term financial flexibility.

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Additional liquidity measure

The cash conversion cycle for Hanesbrands Inc has shown fluctuations over the past five years. In 2020, the company had a cash conversion cycle of 113.01 days, which increased to 139.33 days in 2021. Subsequently, in 2022, there was a significant spike to 180.08 days before decreasing to 133.51 days in 2023. By the end of 2024, the cash conversion cycle had slightly increased to 148.02 days.

The cash conversion cycle represents the time it takes for Hanesbrands Inc to convert its investments in inventory and other resources into cash flows from sales. A longer cash conversion cycle may indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers, potentially impacting the company's liquidity and overall financial health.

Overall, the trend in Hanesbrands Inc's cash conversion cycle suggests some variability and an upward trajectory in recent years, warranting a closer examination of the company's working capital management and operational efficiency.