Pool Corporation (POOL)

The current ratio of Pool Corporation has shown a slight increase from 2.32 in December 2020 to 2.38 in December 2021, followed by a more significant rise to 2.99 in December 2022. However, there was a decrease to 2.36 in December 2023 and a further decline to 2.05 in December 2024. This indicates that the company's ability to meet its short-term obligations improved initially but deteriorated in the latter years.

In terms of quick ratio, Pool Corporation had a very low ratio of 0.07 in December 2020, which decreased to 0.03 in December 2021 before rebounding to 0.07 in December 2022. The quick ratio further improved to 0.09 in both December 2023 and December 2024. This suggests that the company's ability to cover its immediate liabilities with its most liquid assets improved over the years.

Further focusing on the cash ratio, the company maintained a consistent ratio of 0.07 in December 2020 and December 2022, and 0.09 in December 2023 and December 2024. The cash ratio remained at a low level of 0.03 in December 2021. This indicates that Pool Corporation had a relatively low level of cash to cover its short-term obligations in December 2020 and December 2022, with improvements seen in the subsequent years.

Overall, while the current ratio fluctuated over the years, Pool Corporation managed to strengthen its quick and cash ratios, indicating an improved ability to meet short-term obligations with highly liquid assets like cash and equivalents.

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Additional liquidity measure

The cash conversion cycle, a key efficiency ratio for Pool Corporation, shows a noticeable fluctuation over the five-year period from December 31, 2020, to December 31, 2024.

Starting at 101.60 days in 2020, the company's cash conversion cycle increased steadily to 132.87 days by the end of 2021. This rise continued into 2022, reaching 136.76 days, indicating a prolonged period between the company's cash outflows for inventory and inflows from sales.

However, there was a slight improvement in 2023 as the cash conversion cycle decreased to 128.40 days, but it still remained elevated compared to the initial level. By December 31, 2024, the cycle showed a further decrease to 125.98 days, potentially pointing towards the company becoming more efficient in managing its cash flow and working capital.

Overall, Pool Corporation's cash conversion cycle has been volatile over the years, with a visible peak in 2022. The recent decrease in the cycle suggests some improvement in the company's ability to convert its inventory investments into cash more promptly. Further monitoring of this ratio will be crucial to assess the effectiveness of the company's working capital management strategies.