Monro Muffler Brake Inc (MNRO)

Monro Muffler Brake Inc's liquidity ratios show a consistent downward trend over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has significantly decreased from 2.34 in 2020 to 0.56 in 2024. This suggests that Monro Muffler Brake Inc may be facing challenges in meeting its short-term obligations with its current asset base.

Similarly, the quick ratio and cash ratio, which provide a more conservative measure of liquidity by excluding inventory and other less liquid assets, have also declined over the years. The quick ratio dropped from 0.14 in 2021 to 0.01 in 2024, indicating a potential strain on the company's ability to meet immediate liabilities without relying on inventory.

Overall, the declining trend in Monro Muffler Brake Inc's liquidity ratios raises concerns about its ability to efficiently manage its short-term cash flows and financial obligations. This downward trend may require the company to evaluate its working capital management strategies and potentially seek ways to improve its liquidity position in the future.

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Additional liquidity measure

The cash conversion cycle for Monro Muffler Brake Inc has shown a significant improvement over the last five years. In the most recent fiscal year ending on March 31, 2024, the company had a negative cash conversion cycle of -888.46 days, indicating an efficient management of working capital. This improvement from the prior year's figure of -972.78 days suggests that Monro Muffler Brake Inc has been able to convert its inventory, accounts receivable, and accounts payable into cash at a faster rate.

In contrast, the company had a positive cash conversion cycle in the previous three years, with the cycle decreasing from 282.28 days in 2022 to 491.00 days in 2021 and finally to 951.67 days in 2020. A positive cash conversion cycle typically indicates that a company's operations are utilizing cash inefficiently, resulting in a longer time to convert investments in inventory and accounts receivable into cash from sales.

Overall, the recent improvement in Monro Muffler Brake Inc's cash conversion cycle is a positive sign, reflecting better working capital management and operational efficiency. However, it is essential for the company to sustain this trend and continue to focus on optimizing its working capital to support its financial health and liquidity position.