O’Reilly Automotive Inc (ORLY)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.71 | 0.73 | 0.71 | 0.77 | 0.86 |
| Quick ratio | 0.02 | 0.04 | 0.02 | 0.06 | 0.09 |
| Cash ratio | 0.02 | 0.04 | 0.02 | 0.06 | 0.09 |
The liquidity ratios of O’Reilly Automotive Inc indicate its ability to meet its short-term financial obligations effectively.
The current ratio has been declining over the years, from 0.86 in 2020 to 0.71 in 2024. This downward trend suggests that the company may be facing challenges in maintaining sufficient current assets to cover its current liabilities. A current ratio below 1.0 may indicate potential liquidity issues.
The quick ratio, which provides a more conservative measure of liquidity excluding inventory, also shows a decreasing trend from 0.09 in 2020 to 0.02 in 2024. This implies that O’Reilly Automotive may have difficulty in meeting its short-term obligations without relying on inventory liquidation.
Furthermore, the cash ratio, which is the most stringent liquidity ratio as it considers only cash and cash equivalents, follows a similar declining trend from 0.09 in 2020 to 0.02 in 2024. This indicates that the company may have limited cash reserves available to cover immediate liabilities.
In conclusion, based on the declining current ratio, quick ratio, and cash ratio over the years, O’Reilly Automotive Inc may need to enhance its liquidity position by improving its current asset management or exploring alternative sources of liquidity to better meet its short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 228.11 | 220.61 | 226.39 | 213.32 | 241.61 |
The cash conversion cycle of O’Reilly Automotive Inc has shown a gradual improvement over the years. Starting at 241.61 days on December 31, 2020, it decreased to 213.32 days by December 31, 2021, showcasing efficiency in managing its cash flows. Subsequently, on December 31, 2022, there was a slight increase to 226.39 days, possibly due to changing market conditions or internal adjustments.
However, the company managed to bring down the cash conversion cycle to 220.61 days by December 31, 2023, indicating a proactive approach to optimizing working capital. Finally, by December 31, 2024, the cycle increased slightly to 228.11 days, potentially reflecting the need for strategic interventions to maintain cash flow efficiency.
Overall, O’Reilly Automotive Inc has demonstrated a trend towards a more streamlined cash conversion cycle, enhancing its liquidity position and operational effectiveness. Further analysis of the underlying factors driving these fluctuations could provide insights into the company's financial management strategies and resilience in the competitive automotive industry.