Monster Beverage Corp (MNST)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 4.81 | 4.76 | 4.85 | 4.19 | 3.50 |
| Quick ratio | 3.83 | 3.68 | 4.12 | 3.64 | 2.83 |
| Cash ratio | 2.80 | 2.66 | 3.19 | 2.75 | 2.01 |
Monster Beverage Corp. has demonstrated consistently strong liquidity ratios over the past five years.
1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Monster Beverage Corp. has seen a gradual increase in its current ratio, from 3.50 in 2019 to 4.81 in 2023. This indicates that the company has improved its ability to meet its short-term obligations using its current assets.
2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Monster Beverage Corp. has displayed a similar upward trend in its quick ratio, increasing from 2.96 in 2019 to 3.97 in 2023. This suggests that the company has a solid ability to meet its short-term liabilities without relying on inventory.
3. Cash Ratio: The cash ratio specifically measures the company's ability to cover its short-term liabilities with cash and cash equivalents. Monster Beverage Corp. has shown a consistent improvement in its cash ratio over the years, from 2.14 in 2019 to 2.95 in 2023. This implies that the company has a sufficient level of cash to meet its immediate financial obligations.
Overall, Monster Beverage Corp.'s liquidity ratios indicate a healthy financial position with ample liquidity to meet its short-term obligations. The company has enhanced its liquidity position over the past five years, which reflects positively on its ability to manage liquidity and financial risks effectively.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 98.18 | 107.27 | 82.28 | 58.61 | 61.38 |
The cash conversion cycle of Monster Beverage Corp. has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle was 105.44 days, indicating that on average, it takes Monster Beverage Corp. approximately 105.44 days to convert its investments in inventory and accounts receivable into cash received from sales. This represents an improvement from the previous year's figure of 115.95 days.
Comparing the 2023 data with earlier years, the company's cash conversion cycle has increased significantly from 59.93 days in 2020 to 105.44 days in 2023. This elongation suggests that Monster Beverage Corp. may be experiencing challenges in efficiently managing its working capital and converting assets into cash, which in turn can impact its liquidity and operational efficiency.
It is important for Monster Beverage Corp. to closely monitor its cash conversion cycle to identify areas where improvements can be made, such as optimizing inventory management and streamlining accounts receivable collection processes. Overall, a shorter cash conversion cycle indicates efficient working capital management and better liquidity position for the company.