Kontoor Brands Inc (KTB)

Based on the provided data, Kontoor Brands Inc's liquidity ratios show some fluctuations over the years.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. Kontoor Brands Inc's current ratio has been consistently above 2 in recent years, indicating a healthy level of liquidity. The ratio improved from 2.18 in 2020 to 2.70 in 2024, reflecting an increase in the company's ability to meet its short-term obligations.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Kontoor Brands Inc's quick ratio fluctuated over the years, with a noticeable decrease from 1.16 in 2020 to 0.65 in 2022 before rising again to 1.47 in 2024. The improving trend since 2022 suggests an enhanced ability to meet short-term obligations without relying heavily on inventory.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity measure, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents. Kontoor Brands Inc's cash ratio declined from 0.60 in 2020 to 0.13 in 2022 but rebounded significantly to 0.85 in 2024. This improvement indicates a strengthened ability to pay off short-term debts solely with cash on hand.

In conclusion, while the quick ratio experienced some volatility, the current ratio and cash ratio depict a positive trend in Kontoor Brands Inc's liquidity position. The company's ability to meet its short-term obligations has generally improved over the years, with a notable increase in the cash ratio reflecting enhanced cash reserves for liquidity management.

---

Additional liquidity measure

The cash conversion cycle of Kontoor Brands Inc has fluctuated over the past five years based on the provided data. In December 31, 2020, the company's cash conversion cycle was 71.96 days, which decreased slightly to 68.19 days by December 31, 2021. However, by December 31, 2022, the cycle significantly increased to 93.92 days, indicating a longer time taken for the company to convert its investments in inventory back to cash.

Subsequently, by December 31, 2023, there was a slight improvement as the cash conversion cycle decreased to 81.59 days. The cycle further improved by December 31, 2024, reaching 67.66 days, which was similar to the level in 2021.

Overall, these fluctuations in the cash conversion cycle suggest variations in the efficiency of Kontoor Brands Inc's working capital management over the years. A lower cash conversion cycle typically indicates that the company is able to quickly convert its inventory into cash, reflecting efficient operations. In contrast, a higher cycle may indicate inefficiencies in managing inventory, accounts receivable, and accounts payable, which could impact the company's overall liquidity and financial health.