Jack In The Box Inc (JACK)

The liquidity ratios of Jack In The Box Inc have shown a downward trend over the past five years, indicating a deterioration in the company's ability to meet its short-term obligations with its current assets.

The current ratio, measuring the company's ability to cover short-term liabilities with current assets, has decreased from 1.44 in 2019 to 0.58 in 2023. This decline suggests that Jack In The Box may be facing challenges in managing its current liabilities efficiently.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also shown a decline from 1.08 in 2019 to 0.46 in 2023. This indicates a decreasing ability to meet short-term obligations without relying on selling inventory.

The cash ratio, representing the company's ability to cover immediate liabilities with cash and cash equivalents, has also decreased significantly from 0.79 in 2019 to 0.28 in 2023. This downward trend raises concerns about Jack In The Box's liquidity position and its ability to handle unforeseen expenses or financial difficulties.

Overall, the deteriorating liquidity ratios of Jack In The Box Inc suggest a potential strain on the company's short-term financial health and liquidity management. It is essential for the company to closely monitor and improve these ratios to ensure its ability to meet financial obligations and sustain operational efficiency.

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Additional liquidity measure

Based on the data provided, Jack In The Box Inc's cash conversion cycle has exhibited a fluctuating trend in recent years. The cash conversion cycle represents the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales.

Jack In The Box Inc's cash conversion cycle was notably negative in the past five years, indicating efficient management of working capital and quick cash turnover. The negative values suggest that the company's cycle is typically shorter than the standard industry average, which is generally a positive indicator of operational efficiency.

The cash conversion cycle improved from -21.24 days in 2019 to -12.39 days in 2023, with intermittent fluctuations in between. This improvement suggests that the company has been able to manage its inventory and receivables more effectively in recent years, leading to a quicker conversion of resources into cash.

However, it's essential to note that a negative cash conversion cycle can sometimes imply aggressive policies that may affect the company's long-term financial health if not adequately managed. Therefore, while a shorter cash conversion cycle is generally favorable, it's crucial for Jack In The Box Inc to monitor and balance operational efficiency with sustainable financial practices to ensure long-term success.