NVR Inc (NVR)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 4.25 | 5.64 | 5.95 | 3.33 | 1.78 |
| Quick ratio | 2.63 | 3.09 | 3.20 | 3.33 | 1.78 |
| Cash ratio | 2.63 | 3.09 | 3.20 | 3.33 | 1.78 |
NVR Inc.'s liquidity ratios have shown positive trends over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has significantly improved from 2.08 in 2019 to 4.16 in 2023. This indicates that NVR Inc. has increased its liquidity and is in a stronger position to meet its short-term financial obligations.
The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also reflects an improvement over the years. NVR Inc.'s quick ratio has increased from 1.12 in 2019 to 2.60 in 2023, indicating the company's enhanced ability to cover its immediate liabilities with its most liquid assets.
Additionally, the cash ratio, which specifically measures the company's ability to cover its short-term liabilities with its cash and cash equivalents, has also shown a positive trend. NVR Inc.'s cash ratio has increased from 1.11 in 2019 to 2.58 in 2023, suggesting that the company has strengthened its ability to meet its short-term obligations with its readily available cash resources.
Overall, NVR Inc.'s liquidity ratios have improved consistently over the past five years, reflecting the company's enhanced liquidity position and improved ability to meet its short-term financial obligations.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 19,021.53 | 16,786.83 | 19,569.67 | 17,224.35 | 117,085.92 |
The cash conversion cycle of NVR Inc. has shown fluctuations over the past five years. In 2023, the cash conversion cycle increased to 84.04 days compared to the previous year's 69.99 days. This suggests that NVR Inc. took longer to convert its investments in inventory into cash receipts from customers.
Comparing to 2021 and 2022, the cash conversion cycle in 2023 improved slightly from 87.69 days to 84.04 days, indicating some efficiency in managing working capital. However, it remained higher than the 68.55 days seen in 2019, suggesting a longer cycle in converting inventory to cash during the most recent year.
Overall, NVR Inc. may benefit from strategies to optimize inventory management and streamline its cash conversion cycle to improve liquidity and operational efficiency in the future.