Marten Transport Ltd (MRTN)

The liquidity ratios of Marten Transport, Ltd. over the past five years indicate the company's ability to meet its short-term obligations and manage its current liabilities effectively.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term liabilities with its current assets. Marten Transport's current ratio has been declining slightly over the past five years, from 2.02 in 2019 to 1.78 in 2023. Although the current ratio is above 1, indicating that the company has more current assets than current liabilities, the decreasing trend raises a concern about potential liquidity issues in the future.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Marten Transport's quick ratio has followed a similar declining trend as the current ratio, ranging from 1.91 in 2019 to 1.68 in 2023. This indicates that the company may have lower liquidity when excluding inventory from its current assets.

3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with cash and cash equivalents alone. Marten Transport's cash ratio has fluctuated over the past five years, reaching its lowest point at 0.58 in 2019 and peaking at 0.89 in 2020. The ratio has decreased in recent years, standing at 0.63 in 2023, suggesting a potential decrease in the company's ability to cover its short-term obligations with cash on hand.

Overall, the decreasing trend in Marten Transport's liquidity ratios signals a potential need for the company to closely monitor its working capital management and ensure that it maintains adequate levels of liquidity to meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Marten Transport, Ltd. has shown fluctuations over the past five years, ranging from 36.58 days in 2020 to 44.05 days in 2019. It decreased to 36.94 days in 2022 after increasing to 39.73 days in 2021. In 2023, the cash conversion cycle increased slightly to 37.37 days.

Overall, the company has managed to optimize its cash conversion cycle over the years, indicating an efficient management of cash flows and working capital. This metric reflects the time it takes for the company to convert its investments in inventory and other resources into cash from sales. A lower cash conversion cycle signifies faster cash generation, improved liquidity, and potentially better financial health for Marten Transport, Ltd. Moving forward, the company should continue to monitor and manage its working capital efficiently to sustain or further improve its cash conversion cycle and overall financial performance.