Lancaster Colony Corporation (LANC)

Lancaster Colony Corporation's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has generally been above 2x, indicating a healthy liquidity position. However, there was a slight decrease in the current ratio from 2020 to 2021, followed by a recovery in 2022 and another slight decline in 2023. The ratio then improved in 2024 compared to the previous year.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also demonstrates a similar trend as the current ratio. It has consistently been above 1x, providing further evidence of Lancaster Colony's ability to meet its short-term liabilities without relying heavily on inventory. Like the current ratio, the quick ratio experienced fluctuations over the years, with slight decreases in 2021 and 2023 followed by improvements in subsequent years.

The cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, shows more volatility compared to the other liquidity ratios. Although the cash ratio has generally been above 1x, indicating a healthy cash position, there were significant fluctuations in the ratio from year to year. The ratio reached its peak in 2020 but witnessed a sharp decline in 2021 before gradually recovering in subsequent years.

Overall, Lancaster Colony Corporation's liquidity ratios, including the current ratio, quick ratio, and cash ratio, reflect a generally sound liquidity position over the past five years, despite some fluctuations. The company appears to have the ability to meet its short-term obligations and maintain adequate levels of liquidity to support its operations.

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Additional liquidity measure

The cash conversion cycle of Lancaster Colony Corporation has fluctuated over the past five years. In the most recent fiscal year ending June 30, 2024, the cash conversion cycle stood at 30.50 days, representing a decrease from the previous year's 33.09 days. This indicates that Lancaster Colony improved its efficiency in converting resources into cash during this period.

Comparing the latest cycle to five years ago, we observe a downward trend from 27.97 days to 30.50 days, suggesting a slight increase in the time it takes for Lancaster Colony to convert its investments in inventory and accounts receivable into cash. Despite this, it is important to note that the company has maintained relatively stable cash conversion cycles over the years, indicating effective management of working capital and operational efficiency in its supply chain and sales processes.