Jack In The Box Inc (JACK)

The liquidity ratios of Jack In The Box Inc, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

The current ratio has declined over the years, from 0.99 in 2020 to 0.42 in 2024. This indicates a decreasing ability to cover its current liabilities with current assets, which may raise concerns about the company's short-term financial health.

Similarly, the quick ratio has also decreased over the years, from 0.82 in 2020 to 0.25 in 2024. This ratio excludes inventory from current assets, providing a more conservative measure of liquidity. A declining quick ratio suggests that the company may struggle to meet its immediate obligations without relying on inventory.

Furthermore, the cash ratio has shown a significant decrease from 0.59 in 2020 to 0.06 in 2024. This ratio specifically measures the company's ability to cover current liabilities with cash and cash equivalents. A decreasing cash ratio may indicate that the company has less liquid cash resources available to meet its short-term obligations.

In summary, the declining trend in all three liquidity ratios - current ratio, quick ratio, and cash ratio - suggests that Jack In The Box Inc may be facing challenges in meeting its short-term financial obligations. Investors and stakeholders should closely monitor these liquidity metrics to assess the company's liquidity risk.

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Additional liquidity measure

The cash conversion cycle for Jack In The Box Inc has shown a fluctuating trend over the past five years. It was negative in all years, indicating that the company was able to convert its investments in inventory and accounts receivable into cash relatively quickly.

In 2020 and 2021, the company had a cash conversion cycle of -2.82 days and -2.06 days, respectively, indicating a relatively short period between the company's cash outflows for inventory and cash inflows from sales. This suggests efficient inventory management and collection of accounts receivable.

In 2022, the cash conversion cycle improved significantly to -4.81 days, indicating further enhancement in inventory management and collection practices. However, in 2023 and 2024, the cash conversion cycle worsened slightly to -12.39 days and -13.17 days, respectively. This suggests that the company took longer to convert investments in inventory and accounts receivable into cash in those years.

Overall, while the company has historically maintained a negative cash conversion cycle, indicating efficiency in managing working capital, the recent fluctuations suggest a need to carefully monitor and optimize inventory and accounts receivable processes to ensure cash flows remain healthy and cash conversion cycles are minimized.