Kontoor Brands Inc (KTB)

The current ratio of Kontoor Brands Inc has exhibited some fluctuations over the quarters, trending downwards from 3.44 in March 2020 to 2.70 in June 2024, but generally staying above 2. This indicates that the company has a healthy amount of current assets relative to its current liabilities, providing a cushion to cover short-term obligations.

In contrast, the quick ratio, which excludes inventory from current assets, has shown greater variability, dropping from 2.05 in March 2020 to 1.15 in June 2024. Despite some fluctuations, the quick ratio has generally stayed above 1 during the period, suggesting that Kontoor Brands Inc can meet its short-term liabilities with a portion of its most liquid assets.

Further focusing on liquidity, the cash ratio has declined over the quarters, decreasing from 1.47 in March 2020 to 0.85 in December 2024. This ratio indicates the company's ability to cover its short-term liabilities with its cash and cash equivalents alone. Although the ratio has decreased, it has generally remained above 1, signaling that Kontoor Brands Inc holds enough cash to cover a significant portion of its immediate obligations.

Overall, the liquidity ratios of Kontoor Brands Inc suggest that the company has maintained a solid liquidity position over the quarters, with a healthy current ratio, a generally stable quick ratio, and a decreasing but still adequate cash ratio.

---

Additional liquidity measure

The cash conversion cycle (CCC) of Kontoor Brands Inc has shown fluctuations over the provided period. Initially, the CCC was around 87.45 days as of March 31, 2020, highlighting that it took the company approximately that many days to convert its investments in inventory into cash.

Over the next few quarters, the trend showed an improvement in the efficiency of the company's working capital management, as the CCC decreased steadily to 63.58 days by March 31, 2021. This indicated that the company was managing its inventory, accounts receivable, and accounts payable more efficiently, resulting in a shorter cash conversion cycle.

However, in the subsequent quarters, there were some fluctuations in the CCC, as it increased slightly to 67.94 days by June 30, 2021, followed by a decrease to 67.31 days by September 30, 2021. This fluctuation continued until the end of 2022, where the CCC was relatively stable around 93-94 days.

Notably, as of March 31, 2023, the CCC increased significantly to 110.66 days, indicating a potential slowdown in the company's cash conversion efficiency. This trend continued until June 30, 2023, where the CCC remained high at 93.95 days.

However, from September 30, 2023, the CCC started showing signs of improvement, decreasing to 81.57 days by the end of December 31, 2023. This positive trend continued throughout the first half of 2024, with the CCC declining to 76.68 days as of June 30, 2024, and further dropping to 67.77 days by the end of December 31, 2024.

Overall, the analysis of Kontoor Brands Inc's cash conversion cycle indicates fluctuations in its working capital efficiency over the analyzed period, with periods of both improvement and deterioration. It is essential for the company to continue monitoring and managing its CCC effectively to ensure optimal utilization of its working capital and cash flow.