Polaris Industries Inc (PII)

Based on the liquidity ratios of Polaris Inc for the five most recent years, there are some notable trends and insights to consider:

1. Current Ratio:
- The current ratio has shown a general increasing trend from 1.06 in 2019 to 1.39 in 2023. This indicates that Polaris Inc has been improving its ability to cover its short-term liabilities with its current assets over the years. A current ratio above 1 suggests the company has more current assets than current liabilities.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, measures the company's ability to meet its short-term obligations with its most liquid assets. The quick ratio has fluctuated over the years, with a significant increase from 0.33 in 2019 to 0.46 in 2023. This indicates an improvement in Polaris Inc's ability to cover its short-term liabilities without relying on inventory.

3. Cash Ratio:
- The cash ratio, which is the strictest measure of liquidity, shows the amount of cash and cash equivalents a company has to cover its current liabilities. Similar to the quick ratio, the cash ratio has fluctuated over the years but has shown an overall increasing trend from 0.19 in 2019 to 0.29 in 2023. This suggests that Polaris Inc has been increasing its cash reserves relative to its current liabilities.

In conclusion, Polaris Inc has shown positive trends in its liquidity ratios over the past five years, indicating an improvement in its ability to meet short-term obligations and manage liquidity risk effectively. The increasing current ratio, quick ratio, and cash ratio suggest that the company is in a better position to cover its short-term liabilities and withstand financial downturns.

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Additional liquidity measure

The cash conversion cycle of Polaris Inc has fluctuated over the past five years. In 2023, the company's cash conversion cycle increased to 70.32 days from 73.17 days in 2022. This indicates that it took Polaris Inc an average of approximately 70 days to convert its investments in raw materials into cash receipts from customers.

Compared to 2021, where the cash conversion cycle was 60.33 days, the company took longer to convert its resources into cash in 2023. However, the cycle in 2023 was still longer than in 2020 when it was 40.70 days. The increase in the cash conversion cycle from 2020 to 2023 suggests potential challenges in managing liquidity and working capital during this period.

It is worth noting that in 2019, the cash conversion cycle stood at 59.69 days, slightly lower than in 2023. This indicates that the company's efficiency in managing its cash flow may have improved compared to 2019, but there is room for further optimization to shorten the cash conversion cycle and enhance overall liquidity management.