Penske Automotive Group Inc (PAG)

Liquidity ratios

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Current ratio 1.00 0.99 0.95 0.94 0.98
Quick ratio 0.21 0.21 0.20 0.50 0.18
Cash ratio 0.02 0.02 0.02 0.33 0.01

Based on the liquidity ratios of Penske Automotive Group Inc over the past five years, we can observe the following trends:

1. Current Ratio:
The current ratio has been fluctuating around 1.00 over the years, indicating that the company has just enough current assets to cover its current liabilities. While a current ratio of 1.00 signifies a balanced liquidity position, Penske Automotive Group Inc may need to monitor its ability to meet short-term obligations.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, has been consistently below 0.30, reflecting a relatively low level of liquidity. This indicates that the company may struggle to meet its short-term obligations without relying on inventory sales. A quick ratio below 1.00 suggests a potential liquidity risk for Penske Automotive Group Inc.

3. Cash Ratio:
The cash ratio has shown improvement over the years, with a gradual increase from 0.02 in 2019 to 0.05 in 2023. This indicates the company's ability to cover its current liabilities with its cash on hand alone. Although the cash ratio has been low historically, the recent upward trend suggests an enhanced liquidity position in terms of cash availability.

In conclusion, Penske Automotive Group Inc has shown a stable current ratio, a consistently low quick ratio, and an improving cash ratio over the past five years. While the company may have adequate current assets to cover its short-term obligations, the low quick ratio raises concerns about its ability to meet immediate liabilities without selling inventory. Management should continue to monitor and improve liquidity ratios to ensure financial stability and meet ongoing obligations.


Additional liquidity measure

Dec 31, 2023 Dec 31, 2022 Dec 31, 2021 Dec 31, 2020 Dec 31, 2019
Cash conversion cycle days 58.42 48.92 46.28 65.57 82.19

The cash conversion cycle for Penske Automotive Group Inc has shown fluctuations over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

In 2023, the cash conversion cycle increased to 64.63 days from 54.09 days in 2022. This suggests that the company took longer to convert its investments into cash compared to the previous year. This increase could be due to factors such as slower inventory turnover or delayed collections from customers.

In 2021, the company managed to improve its cash conversion cycle to 51.31 days from 72.57 days in 2020. This indicates that Penske Automotive Group Inc became more efficient in managing its working capital and converting investments into cash during this period.

However, in 2020 and 2019, the cash conversion cycle was relatively high at 72.57 days and 82.15 days, respectively. This suggests that the company faced challenges in efficiently managing its working capital and converting investments into cash during those years.

Overall, the trend in the cash conversion cycle for Penske Automotive Group Inc has shown variability over the past five years, with improvements in some years and challenges in others. It is important for the company to continue monitoring and optimizing its working capital management to ensure efficient cash conversion in the future.