JB Hunt Transport Services Inc (JBHT)

The analysis of J.B. Hunt Transport Services, Inc.'s liquidity ratios over the last five years reveals certain trends.

The current ratio, which measures the company's ability to meet its short-term obligations using current assets, has shown a fluctuating pattern. The ratio decreased from 1.70 in 2020 to 1.17 in 2023, indicating a potential weakening in the company's liquidity position. A higher current ratio is generally preferred as it suggests a stronger ability to cover short-term obligations.

The quick ratio, also known as the acid-test ratio, reflects the company's immediate liquidity position by excluding inventory from current assets. Similar to the current ratio, the quick ratio showed a declining trend from 1.68 in 2020 to 1.15 in 2023. This indicates that J.B. Hunt Transport Services, Inc. may have a reduced capacity to meet short-term liabilities using its most liquid assets.

The cash ratio, which indicates the proportion of cash and cash equivalents to current liabilities, has been relatively low over the past five years. The decreasing trend from 0.47 in 2020 to 0.20 in 2023 suggests a potential liquidity risk for the company, as it has limited cash on hand relative to its short-term obligations.

Overall, the declining trend in all three liquidity ratios over the past five years raises concerns about J.B. Hunt Transport Services, Inc.'s ability to meet its short-term financial obligations. It is crucial for the company to closely monitor its liquidity position and take appropriate measures to improve its liquidity in order to navigate potential financial challenges effectively.

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Additional liquidity measure

The cash conversion cycle of J.B. Hunt Transport Services, Inc. has exhibited varying trends over the past five years. In 2023, the company's cash conversion cycle stood at -289.57 days, showing an improvement from the previous year. This indicates that J.B. Hunt Transport Services is efficiently managing its cash flow from operations, inventory, and accounts receivable, resulting in a quicker cash conversion cycle.

In 2022, the cash conversion cycle of -251.22 days also reflected a favorable performance, demonstrating effective management of working capital and a faster conversion of resources into cash. However, in 2021, the cash conversion cycle significantly declined to -462.62 days, suggesting a prolonged cash conversion period, possibly due to challenges in managing inventory, accounts receivable, or payment cycles.

The positive cash conversion cycles of 49.63 days in 2020 and 49.47 days in 2019 indicate that J.B. Hunt Transport Services efficiently converted its inputs into cash during those years, with a balanced approach to managing working capital components.

Overall, the variations in J.B. Hunt Transport Services' cash conversion cycle over the years highlight the company's evolving cash flow management strategies and operational efficiency in converting resources into cash. An improving or negative cash conversion cycle generally reflects positively on a company's liquidity and operational effectiveness.