Pilgrims Pride Corp (PPC)

The liquidity ratios of Pilgrims Pride Corp, namely the current ratio, quick ratio, and cash ratio, provide valuable insights into the company's ability to meet its short-term obligations and its overall liquidity position.

1. Current Ratio: The current ratio measures the company's ability to meet its short-term liabilities with its short-term assets. A current ratio of 1.5 in 2020 indicates that the company had $1.50 in current assets for every $1 of current liabilities. Over the years, the current ratio has fluctuated between 1.38 and 2.01, with an increasing trend evident from 2020 to 2024. This suggests that Pilgrims Pride Corp has improved its liquidity position and has more than enough current assets to cover its current liabilities.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. A quick ratio of 0.67 in 2020 indicates that the company had $0.67 in liquid assets to cover each $1 of current liabilities. Similarly to the current ratio, the quick ratio has fluctuated over the years, reaching a high of 1.20 in 2024. Although the quick ratio is lower than the current ratio, the increasing trend suggests a positive liquidity improvement.

3. Cash Ratio: The cash ratio focuses solely on the company's ability to cover its current liabilities with cash and cash equivalents. A cash ratio of 0.28 in 2020 implies that Pilgrims Pride Corp held $0.28 in cash for every $1 of current liabilities. The cash ratio showed variability over the years, with a significant increase to 0.80 in 2024. This indicates a strengthening liquidity position, as the company has increased its cash reserves relative to its short-term obligations.

Overall, the liquidity ratios of Pilgrims Pride Corp demonstrate an improving liquidity position from 2020 to 2024. The company has been able to enhance its ability to meet short-term obligations, with increasing current, quick, and cash ratios reflecting a more robust liquidity profile. This trend suggests a positive outlook for the company's short-term financial health and ability to weather unforeseen challenges.

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Additional liquidity measure

Pilgrims Pride Corp's cash conversion cycle has shown some fluctuations over the years. Starting at 32.73 days on December 31, 2020, it decreased to 30.21 days by December 31, 2021. However, by December 31, 2022, it increased slightly to 32.16 days. There was a more significant rise to 38.52 days by December 31, 2023 before dropping to 31.26 days on December 31, 2024. Overall, the company's cash conversion cycle has displayed some variability, indicating potential shifts in their operating efficiency and working capital management.