O’Reilly Automotive Inc (ORLY)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.73 | 0.71 | 0.77 | 0.86 | 0.86 |
| Quick ratio | 0.10 | 0.08 | 0.13 | 0.15 | 0.08 |
| Cash ratio | 0.04 | 0.02 | 0.06 | 0.09 | 0.01 |
O`Reilly Automotive, Inc.'s liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio has been declining over the past five years, with a value of 0.73 in 2023 compared to 0.86 in 2019. This suggests that the company may have difficulty covering its current liabilities with its current assets.
Similarly, the quick ratio has also shown a decreasing trend, reaching 0.12 in 2023 from 0.08 in 2019. This indicates that O`Reilly Automotive, Inc. may have limited ability to pay off its current liabilities using its most liquid assets.
Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities with its cash and cash equivalents, has also decreased over the years. In 2023, the cash ratio stands at 0.05, down from 0.02 in 2019.
Overall, based on the declining trend in the current ratio, quick ratio, and cash ratio, it appears that O`Reilly Automotive, Inc. is facing challenges in maintaining its liquidity position over the past five years. Management may need to closely monitor and address the company's liquidity concerns to ensure its financial stability and ability to meet short-term obligations.
See also:
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -29.37 | -36.39 | -24.62 | -10.53 | 4.10 |
O`Reilly Automotive, Inc.'s cash conversion cycle has shown fluctuations over the past five years. The company's cash conversion cycle improved significantly in 2020 and 2021, indicating more efficient management of cash flows from operating activities. However, there was a reversal in 2022 and 2023 as the cash conversion cycle deteriorated, with negative figures suggesting potential challenges in managing working capital effectively.
The negative values of the cash conversion cycle imply that O`Reilly Automotive, Inc. generally pays its suppliers well after collecting cash from its customers, which can be advantageous in terms of cash flow management. However, a consistently decreasing cash conversion cycle over the years may indicate that the company is taking longer to collect payments from customers or manage its inventory turnover efficiently.
Overall, it is essential for O`Reilly Automotive, Inc. to closely monitor its cash conversion cycle and implement strategies to improve it to ensure effective management of working capital and sustainable financial performance.