Hertz Global Holdings Inc (HTZ)

The current ratio of Hertz Global Holdings Inc has shown fluctuations over the years, starting at 1.62 in March 2020, peaking at 3.64 in December 2024, and then declining to 3.60 by September 2024. This ratio indicates the company's ability to cover its short-term liabilities with its current assets. The increasing trend in the current ratio from 2020 to 2024 suggests an improvement in the company's liquidity position, except for a slight decrease in the most recent quarter.

In contrast, the quick ratio, which excludes inventory from current assets, shows a different picture. The quick ratio was low in earlier years, indicating potential difficulty in meeting short-term obligations without relying on selling inventory. However, there was a significant improvement in the quick ratio from September 2021 to December 2024, reaching a peak of 1.76 in the last quarter. This improvement suggests a stronger ability to meet short-term obligations without relying on liquidating inventory.

The cash ratio, similar to the quick ratio, focuses on the most liquid assets to cover current liabilities. The cash ratio for Hertz Global Holdings Inc follows a similar trend to the quick ratio, starting low and increasing steadily over the years. The cash ratio improves significantly from 2021 to 2024, reaching 1.76 by December 2024. This indicates an enhanced ability to cover short-term obligations using cash and cash equivalents.

Overall, while the current ratio shows a positive trend in liquidity, the quick ratio and cash ratio demonstrate an even more favorable liquidity position for Hertz Global Holdings Inc. The increasing values of these ratios over the years imply a stronger ability to meet short-term obligations without relying on selling inventory, which is a positive indicator of financial health and liquidity management.

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Additional liquidity measure

The cash conversion cycle for Hertz Global Holdings Inc has shown fluctuations over the periods indicated. Initially, in March 2020, the company had a relatively efficient cash conversion cycle of 17.64 days, indicating that it took 17.64 days to convert its investments in inventory and other resources into cash.

However, by December 2020, the cash conversion cycle expanded significantly to 143.29 days, suggesting the company was taking a much longer time to convert its resources into cash. This prolonged cycle could indicate potential inefficiencies in managing inventory, collecting receivables, or managing payables during that period.

Subsequent periods showed variations in the cash conversion cycle, with improvements seen in March 2021, September 2021, and December 2021, where the company reduced the number of days required to convert its resources into cash.

The most recent data points towards a favorable trend, with the cash conversion cycle reaching 0.00 days in March, June, December 2022, and March 2023. A zero-day cash conversion cycle suggests that the company is efficiently managing its working capital, not holding excess inventory, quickly collecting receivables, and effectively managing payables.

However, a prolonged zero-day cycle throughout an extended period may raise concerns of aggressive working capital management that could impact suppliers or quality of operations. Thus, the company should maintain a balance between an efficient cash conversion cycle and not jeopardizing supplier relationships.