Callaway Golf Company (MODG)

Topgolf Callaway Brands Corp's liquidity ratios indicate its ability to meet short-term obligations and cover immediate financial needs.

The current ratio has shown some fluctuations over the years, ranging from 1.29 to 2.33. A current ratio above 1 suggests that the company has more current assets than current liabilities, with higher values indicating better liquidity. In 2023, the current ratio improved to 1.72, compared to previous years, which is a positive sign of the company's ability to cover its short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Topgolf Callaway Brands Corp's quick ratio has varied significantly from 0.46 to 1.43. A quick ratio above 1 indicates the company can meet its short-term liabilities without relying on potentially illiquid inventory. In 2023, the quick ratio improved to 0.88, which is a positive trend compared to previous years, signaling better short-term liquidity.

The cash ratio, the most conservative liquidity measure, focuses solely on cash and cash equivalents to cover current liabilities. Topgolf Callaway Brands Corp's cash ratio has also fluctuated over the years, ranging from 0.27 to 1.08. A cash ratio above 1 implies the company can meet all current liabilities with cash on hand. In 2023, the cash ratio improved to 0.55, indicating a stronger position in terms of immediate liquidity.

Overall, based on the liquidity ratios, Topgolf Callaway Brands Corp has shown improvements in its ability to meet short-term obligations and cover immediate financial needs in 2023 compared to previous years. However, the company should continue to monitor and manage its liquidity position to ensure financial stability and flexibility in the future.

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Additional liquidity measure

The cash conversion cycle of Topgolf Callaway Brands Corp has varied over the past five years. In 2023, the company's cash conversion cycle decreased to 175.50 days from 204.81 days in 2022, indicating an improvement in efficiency in converting investment in inventory and receivables into cash. This trend follows a pattern of fluctuation, as the cash conversion cycle was lower in 2021 at 131.63 days compared to 2020 and 2019, where it stood at 144.07 days and 184.16 days, respectively.

Overall, a shorter cash conversion cycle is beneficial as it reflects a quicker turnover of cash, indicating that the company is managing its inventory and receivables effectively. However, it is essential to analyze the reasons behind these fluctuations to ensure sustainable improvements in the future.