Penske Automotive Group Inc (PAG)
Liquidity ratios
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.91 | 0.91 | 0.98 | 0.98 | 1.00 | 1.01 | 1.00 | 1.01 | 0.99 | 0.98 | 0.98 | 0.97 | 0.95 | 0.93 | 0.94 | 0.95 | 0.94 | 1.06 | 0.94 | 1.03 |
| Quick ratio | 0.01 | 0.01 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.04 | 0.04 | 0.02 | 0.47 | 0.40 | 0.36 | 0.33 | 0.38 | 0.03 | 0.08 |
| Cash ratio | 0.01 | 0.01 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.02 | 0.04 | 0.04 | 0.02 | 0.47 | 0.40 | 0.36 | 0.33 | 0.38 | 0.03 | 0.08 |
Penske Automotive Group Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.
The current ratio measures the company's ability to cover its short-term obligations with its current assets. Penske Automotive Group Inc's current ratio fluctuated over the period analyzed, ranging from a low of 0.91 to a high of 1.06. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities, which is favorable for meeting short-term obligations. While the company's current ratio fell below 1 in some quarters, it improved towards the end of the period, reaching 1.00 or higher in the last few quarters.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Penske Automotive Group Inc's quick ratio showed some volatility, with values ranging from 0.01 to 0.47. A quick ratio below 1 may indicate that the company would struggle to meet its short-term obligations without relying on inventory sales. The company's quick ratio improved in some quarters but remained relatively low overall, indicating a potential need to manage liquidity more effectively.
The cash ratio, which is the most conservative liquidity measure, focuses solely on the company's ability to cover short-term obligations with its cash and cash equivalents. Penske Automotive Group Inc's cash ratio was consistently low, generally ranging from 0.01 to 0.47. A low cash ratio suggests that the company may have limited cash reserves relative to its short-term liabilities, which could pose challenges during periods of financial stress.
Overall, Penske Automotive Group Inc's liquidity ratios indicate some fluctuations and areas for improvement. While the current ratio showed signs of improvement in recent quarters, the quick ratio and cash ratio remained relatively low. It may be beneficial for the company to enhance its liquidity position by managing working capital more efficiently and exploring ways to increase cash reserves to better meet short-term obligations.
Additional liquidity measure
| Dec 31, 2024 | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 66.37 | 69.90 | 68.54 | 65.15 | 63.62 | 55.49 | 59.41 | 56.82 | 55.75 | 51.59 | 51.01 | 51.77 | 54.09 | 45.36 | 52.05 | 66.88 | 72.44 | 67.48 | 71.69 | 80.90 |
The cash conversion cycle for Penske Automotive Group Inc has shown a fluctuating trend over the past years. It measures the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.
From March 31, 2020, to December 31, 2024, the cash conversion cycle ranged from a high of 80.90 days to a low of 45.36 days. The lower the number of days, the better it is for the company as it indicates that Penske Automotive Group is efficiently managing its inventory, payables, and receivables to generate cash flow.
In terms of recent performance, by December 31, 2024, the cash conversion cycle increased slightly to 66.37 days compared to 51.77 days on March 31, 2022. This indicates a potential slowdown in the company's ability to convert its resources into cash within the same time frame. However, it is essential to monitor trends over consecutive quarters to identify any consistent patterns that may need attention or improvement.
Overall, Penske Automotive Group Inc's cash conversion cycle provides insights into the company's liquidity and operational efficiency. Maintaining a balanced and optimized cash conversion cycle is crucial for sustaining healthy financial performance in the long term.