Leslies Inc (LESL)

Leslies Inc's liquidity ratios demonstrate fluctuations over the past four years. The current ratio has decreased from 1.94 in 2021 to 1.71 in 2024, indicating a slight decline in the company's ability to cover its short-term liabilities with current assets. Despite this decline, the current ratio remains above the industry average, suggesting that Leslies Inc still has a comfortable level of liquidity.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, shows a similar trend. It has improved significantly from 0.40 in 2023 to 0.64 in 2024. This indicates that the company's ability to meet its short-term obligations without relying on inventory has strengthened over the past year.

In contrast, the cash ratio has fluctuated more significantly, ranging from 0.25 in 2023 to 0.44 in 2024. While the cash ratio remains below 1, indicating that Leslies Inc does not hold sufficient cash to cover its short-term liabilities, the upward trend suggests an improvement in the company's cash position.

Overall, Leslies Inc's liquidity ratios show a mixed performance, with the current and quick ratios demonstrating stability or improvement over the years, while the cash ratio fluctuates more significantly. Management should continue to monitor and manage the company's liquidity position to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

Leslies Inc's cash conversion cycle has fluctuated over the past four years. In the most recent fiscal year ending September 30, 2024, the company's cash conversion cycle was at 60.35 days, indicating a more efficient management of its working capital compared to the prior year. This improvement suggests that Leslies Inc has been able to optimize its processes for converting inventory into revenue and collecting payments from customers.

Comparing to the performance in September 30, 2023, where the cash conversion cycle was 76.13 days, Leslies Inc has significantly reduced the time it takes to complete a full cash cycle. However, when compared to September 30, 2022, where the cash conversion cycle was 67.20 days, there seems to have been a temporary improvement in efficiency before reverting to a longer cycle in the following year.

The cash conversion cycle of 42.99 days ending September 30, 2021, was the shortest among the four years analyzed. This indicates that the company was operating with high efficiency in managing its cash flow, inventory turnover, and accounts receivable collection during that period.

Overall, Leslies Inc's cash conversion cycle has shown some variability in recent years, but maintaining a shorter cycle is generally beneficial for the company's liquidity and operational efficiency. They should continue monitoring and evaluating their working capital management to sustain their positive performance in this area.