Kontoor Brands Inc (KTB)

Kontoor Brands Inc's liquidity ratios show a fluctuating trend over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has generally been above 2, indicating a strong liquidity position. However, there was a notable increase in 2023 compared to the previous years, reaching 2.66, which may suggest improved short-term liquidity.

On the other hand, 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 has varied significantly from year to year, with a sharp increase to 1.10 in 2023 from 0.65 in 2022. This surge indicates a potential enhancement in the company's ability to meet its short-term obligations without relying on inventory liquidation.

Furthermore, the cash ratio, which focuses solely on the availability of cash and cash equivalents to cover current liabilities, has experienced fluctuations over the years. In 2023, the cash ratio improved substantially to 0.55, reflecting a notable increase in the company's cash position compared to the previous years.

Overall, Kontoor Brands Inc's liquidity ratios suggest a generally stable liquidity position, with improvements in 2023 across all three ratios. This indicates a positive trend in the company's ability to meet its short-term financial obligations and suggests a strengthened liquidity position moving forward.

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Additional liquidity measure

The cash conversion cycle of Kontoor Brands Inc has exhibited fluctuating trends over the past five years. In 2023, the company's cash conversion cycle was 81.59 days, showing an improvement from the previous year's 93.92 days. This indicates that Kontoor Brands was able to manage its working capital more efficiently in 2023.

However, compared to 2021 when the cash conversion cycle was 68.19 days, there was a slight increase in the number of days it takes for the company to convert its investments in inventory and receivables into cash in 2023.

Overall, Kontoor Brands has been able to maintain its cash conversion cycle below 100 days in the past five years, which is generally considered a positive sign as it implies effective management of working capital and liquidity. Monitoring the trend of the cash conversion cycle can provide insights into the company's operational efficiency and financial health.