Hershey Co (HSY)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.97 | 0.80 | 0.90 | 1.57 | 1.05 |
| Quick ratio | 0.41 | 0.36 | 0.40 | 0.93 | 0.53 |
| Cash ratio | 0.13 | 0.14 | 0.13 | 0.60 | 0.25 |
Based on the data provided, Hershey Company's liquidity ratios have fluctuated over the past five years.
The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Hershey's current ratio has been below 1 for the past three years, indicating that its current liabilities exceed its current assets. This could raise concerns about the company's short-term financial obligations.
The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventory from current assets. Hershey's quick ratio has also been consistently below 1 for the past three years, indicating a potential challenge in meeting immediate obligations without relying on inventory.
The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover its short-term liabilities with cash and cash equivalents. Hershey's cash ratio has been below 1 for the past three years, signaling a limited ability to cover short-term obligations solely with cash on hand.
Overall, the downward trend in Hershey Company's liquidity ratios over the past three years suggests potential challenges in meeting short-term financial obligations without relying heavily on inventory or other non-cash assets. This could indicate a need for the company to improve its working capital management and liquidity position to enhance its financial stability.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 37.87 | 34.12 | 42.88 | 59.07 | 48.10 |
The cash conversion cycle of Hershey Company has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 42.01 days, indicating that it took Hershey approximately 42 days to convert its investments in raw materials and other resources into cash from sales. This represents an increase from the previous year, where the cycle was 37.40 days.
Compared to 2021 and 2020, where the cash conversion cycle was 49.28 days and 59.07 days respectively, the company has shown improvements in managing its working capital efficiency. However, when compared to 2019 when the cycle was 48.10 days, there has been a slight increase in the time it takes for Hershey to convert its resources into cash.
Overall, a lower cash conversion cycle is generally favorable as it indicates that the company is efficient in managing its working capital and turning sales into cash quickly. Hershey's improving cash conversion cycle over the past two years suggests that the company is becoming more efficient in managing its operations and working capital, leading to improved liquidity and financial performance.