Mister Car Wash Inc (MCW)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | |
|---|---|---|---|
| Current ratio | 0.36 | 0.69 | 0.45 |
| Quick ratio | 0.24 | 0.55 | 0.33 |
| Cash ratio | 0.11 | 0.42 | 0.15 |
Mister Car Wash Inc's liquidity ratios show a concerning trend over the three-year period from 2021 to 2023. The current ratio has steadily decreased from 0.45 in 2021 to 0.36 in 2023, indicating a decline in the company's ability to meet its short-term obligations with its current assets.
Similarly, the quick ratio has also decreased from 0.40 in 2021 to 0.31 in 2023, suggesting a further deterioration in the company's ability to cover its short-term liabilities with its most liquid assets.
The cash ratio paints an even more challenging picture, dropping significantly from 0.22 in 2021 to 0.18 in 2023. This indicates that Mister Car Wash Inc may have limited cash reserves to cover its immediate liabilities, which could pose risks to its financial stability.
Overall, the declining trend in all three liquidity ratios raises concerns about Mister Car Wash Inc's short-term financial health and its ability to meet its obligations as they come due. It may need to focus on improving its liquidity position to enhance its financial resilience and stability.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | ||
|---|---|---|---|---|
| Cash conversion cycle | days | -40.31 | -28.08 | -12.13 |
The cash conversion cycle of Mister Car Wash Inc has shown some fluctuations over the past three years. In 2023, the company's cash conversion cycle improved to -23.98 days, indicating that Mister Car Wash is managing its cash flow more efficiently than in the previous year. This suggests that the company is able to convert its investments in inventory and accounts receivable back into cash more quickly.
In 2022, the cash conversion cycle was -14.44 days, which was better than in 2021 when it stood at -17.43 days. This improvement in 2022 suggests that Mister Car Wash was able to reduce the time it takes to sell inventory, collect receivables, and pay its suppliers, resulting in a shorter cash conversion cycle.
Overall, a negative cash conversion cycle indicates that Mister Car Wash Inc is able to generate cash from its operating activities before having to pay its suppliers, which is a favorable position for the company. It indicates efficient working capital management, allowing the company to operate smoothly without tying up excess cash in inventory and receivables.