Prestige Brand Holdings Inc (PBH)

Prestige Brand Holdings Inc has shown a consistent improvement in its liquidity ratios over the past five years.

The current ratio, which measures the ability of the company to meet its short-term obligations with its current assets, has increased steadily from 2.44 in 2020 to 3.20 in 2024. This indicates that Prestige Brand Holdings Inc has a strong liquidity position, with more than enough current assets to cover its current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Prestige Brand Holdings Inc's quick ratio has also shown a positive trend, increasing from 1.16 in 2022 to 1.91 in 2024. This suggests that the company has a sufficient level of highly liquid assets to cover its short-term liabilities.

The cash ratio, which is the most conservative liquidity ratio as it only considers cash and cash equivalents, has fluctuated over the years but has generally been on an upward trajectory. Despite the variability, the cash ratio has improved significantly from 0.19 in 2022 to 0.40 in 2024, indicating that Prestige Brand Holdings Inc has a stronger ability to meet its immediate obligations with its cash reserves.

Overall, Prestige Brand Holdings Inc's liquidity ratios reflect a healthy financial position with a strong ability to meet its short-term obligations. The consistent improvement in these ratios suggests effective management of liquidity and working capital within the company.

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Additional liquidity measure

The cash conversion cycle for Prestige Brand Holdings Inc has shown fluctuations over the past five years. In the most recent fiscal year ending on March 31, 2024, the cash conversion cycle increased to 130.01 days compared to 126.25 days in the previous year. This indicates that it took the company longer to convert its investments in inventory and accounts receivables into cash during the fiscal year 2024.

Looking further back, the cash conversion cycle was the highest in fiscal year 2022 at 97.36 days, followed by fiscal year 2021 at 107.97 days and fiscal year 2020 at 104.72 days. This suggests that the company improved its efficiency in managing its working capital between fiscal years 2022 and 2023, but saw a reversal in fiscal year 2024.

Overall, Prestige Brand Holdings Inc's cash conversion cycle has experienced fluctuations, and management may need to focus on optimizing inventory levels and accounts receivables collection to shorten the cycle and improve cash flow efficiency in the future.