Marten Transport Ltd (MRTN)

From the provided data, we can see the trend in Marten Transport Ltd's liquidity ratios over the past five years.

1. Current Ratio: Marten Transport Ltd's current ratio has slightly fluctuated over the years, starting at 1.96 in 2020 and peaking at 2.00 in 2021 before gradually declining to 1.48 in 2024. Although the current ratio remains above 1 in each year, indicating that the company has more current assets than current liabilities, the decreasing trend warrants attention as it may suggest potential challenges in meeting short-term obligations in the future.

2. Quick Ratio: The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown a decreasing trend from 0.74 in 2020 to 0.18 in 2024. This indicates a decline in the company's ability to meet short-term obligations using its most liquid assets. A quick ratio below 1 may suggest potential liquidity issues, and the decreasing trend in this ratio should be closely monitored.

3. Cash Ratio: The cash ratio, which specifically measures the company's ability to cover its current liabilities with its cash and cash equivalents, mirrors the trend seen in the quick ratio, declining from 0.74 in 2020 to 0.18 in 2024. This sharp decrease in the cash ratio highlights a potential reduction in the company's ability to meet immediate obligations using its cash resources alone.

In summary, Marten Transport Ltd's liquidity ratios have shown a concerning downward trend over the past five years, indicating a potential decrease in the company's ability to meet short-term obligations using its current assets. Management should closely monitor these ratios and consider implementing strategies to improve liquidity levels to ensure financial stability and meet upcoming financial obligations.

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Additional liquidity measure

The cash conversion cycle for Marten Transport Ltd has shown some fluctuations over the years. As of December 31, 2020, the company had a cash conversion cycle of 1.75 days, indicating that it took approximately 1.75 days for the company to convert its investments in inventory into cash.

By the end of December 31, 2021, the cash conversion cycle had increased slightly to 2.02 days, suggesting a slight slowdown in the company's ability to convert its inventory into cash effectively.

In the following year, as of December 31, 2022, the cash conversion cycle improved to 1.93 days, indicating the company's efficiency in managing its inventory and collecting cash from sales.

However, by December 31, 2023, the cash conversion cycle increased significantly to 2.74 days, reflecting potential challenges in the company's inventory management and cash collection processes.

Interestingly, as of December 31, 2024, the cash conversion cycle dropped to 0.00 days, which could potentially indicate a significant improvement or a change in the company's operations that led to an immediate conversion of inventory into cash without any delay.

Overall, fluctuations in the cash conversion cycle can provide insights into Marten Transport Ltd's efficiency in managing its working capital and cash flow processes over the years.