Hershey Co (HSY)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.96 | 0.85 | 0.86 | 0.97 | 0.97 | 1.09 | 1.06 | 0.83 | 0.80 | 0.79 | 0.74 | 0.96 | 0.90 | 1.44 | 1.40 | 1.61 | 1.57 | 1.44 | 1.31 | 0.99 |
| Quick ratio | 0.19 | 0.15 | 0.12 | 0.15 | 0.13 | 0.16 | 0.16 | 0.14 | 0.14 | 0.10 | 0.10 | 0.13 | 0.13 | 0.35 | 0.27 | 0.64 | 0.60 | 0.54 | 0.53 | 0.38 |
| Cash ratio | 0.19 | 0.15 | 0.12 | 0.15 | 0.13 | 0.16 | 0.16 | 0.14 | 0.14 | 0.10 | 0.10 | 0.13 | 0.13 | 0.35 | 0.27 | 0.64 | 0.60 | 0.54 | 0.53 | 0.38 |
Hershey Co's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations and the level of its liquid assets.
The current ratio for Hershey Co has fluctuated over the years, starting from below 1 in March 2020 to peaking at 1.61 in March 2021 before declining. The ratios hovered mostly above 1, indicating that the company generally had sufficient current assets to cover its current liabilities. However, there was a notable drop in the current ratio towards the end of 2021 and into 2022, suggesting a potential strain on liquidity during that period.
In terms of the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, Hershey Co's ratios were generally lower compared to the current ratio. The quick ratio followed a similar trend to the current ratio, showing fluctuations but remaining mostly below 1. This indicates that the company may have had difficulty meeting its short-term obligations without relying on inventory in certain periods.
The cash ratio, which focuses solely on the most liquid assets like cash and cash equivalents, also mirrors the trend of the quick ratio. Hershey Co's cash ratio remained relatively low, staying close to or below 0.2 throughout the period covered in the data. This suggests that the company's ability to pay off its current liabilities using only its cash reserves was limited.
Overall, the liquidity ratios of Hershey Co show that while the company generally maintained a current ratio above 1, indicating short-term solvency, the quick and cash ratios were lower, suggesting a potential constraint on liquid assets available for immediate obligations. It will be essential for Hershey Co to manage its liquidity effectively to ensure it can meet its short-term financial commitments.
See also:
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 75.66 | 76.63 | 87.10 | 66.13 | 80.06 | 80.11 | 83.03 | 70.57 | 72.32 | 75.49 | 81.59 | 73.87 | 73.29 | 77.53 | 82.81 | 73.39 | 79.11 | 79.85 | 82.29 | 68.87 |
The cash conversion cycle of Hershey Co, which measures how long it takes for the company to convert its investments in inventory and other resources into cash flows from sales, has shown some fluctuations over the past few years.
From March 2020 to June 2024, the cycle varied between 66.13 days and 87.10 days, with an average of approximately 77 days. The trend indicates some seasonality, with peaks generally observed in the middle and end of each year. Notably, improvements in the cycle were seen in March 2024 and December 2024 compared to the highest point in June 2024.
Analyzing the components of the cash conversion cycle, it seems that Hershey Co may have been managing its inventory, accounts receivable, and accounts payable efficiently in certain periods, while facing challenges in others. Overall, a downward trend in the cash conversion cycle, particularly towards the end of the time period, may suggest improved working capital management and enhanced liquidity for the company.
Further analysis, including benchmarking against industry peers and historical data, could provide additional insights into Hershey Co's operational efficiency and financial health.