Patrick Industries Inc (PATK)

Patrick Industries Inc's liquidity ratios indicate its ability to meet short-term obligations.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has been consistently above 2 over the past five years. This suggests that the company has a strong liquidity position and should be able to meet its current obligations comfortably.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has shown some fluctuations over the years. Although it dipped in 2022 and 2023, it increased in 2024. The quick ratio values below 1 may indicate that the company may have some difficulty in meeting its short-term obligations without relying on the sale of inventory.

The cash ratio, which indicates the company's ability to cover its current liabilities with its cash and cash equivalents, has also shown fluctuations but generally remains low. This may suggest that Patrick Industries Inc relies more on other current assets besides cash to meet its short-term obligations.

Overall, while the current ratio reflects strong liquidity, the quick and cash ratios indicate some fluctuation and potential need for improvement in managing short-term liquidity using liquid assets.

---

Additional liquidity measure

The cash conversion cycle of Patrick Industries Inc has shown some variability over the years. In December 2020, the company's cash conversion cycle stood at 56.31 days, indicating that on average it took approximately 56 days to convert its investments in inventory into cash receipts from sales.

By December 2024, the cash conversion cycle had increased to 69.91 days, suggesting a longer period for the company to convert its investments in inventory back into cash. This trend indicates potential challenges in managing working capital efficiently and may require further analysis of inventory management practices or accounts receivable collection procedures.

Overall, the fluctuation in the cash conversion cycle of Patrick Industries Inc highlights the importance of closely monitoring working capital metrics to ensure optimal operational efficiency and cash flow management.