Papa John's International Inc (PZZA)

Papa John's International, Inc.'s liquidity ratios, including the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term financial obligations.

The current ratio has shown fluctuating trends over the past five years, with a noticeable decline from 1.06 in 2020 to 0.76 in 2023. This ratio indicates that the company may have difficulties in covering its current liabilities with its current assets. A current ratio below 1 suggests potential liquidity challenges.

The quick ratio, which excludes inventory from current assets, also demonstrates a downward trend over the same period, from 0.96 in 2020 to 0.64 in 2023. This implies that Papa John's may have limited ability to meet its short-term obligations without relying on inventory, which may not be easily convertible to cash in times of need.

The cash ratio, which measures the proportion of cash and cash equivalents to current liabilities, has decreased consistently from 0.60 in 2020 to 0.27 in 2023. This signifies a decreasing ability to settle immediate obligations with readily available cash resources alone.

Overall, the declining trend in all three liquidity ratios raises concerns about Papa John's International, Inc.'s short-term financial health and ability to manage its current liabilities efficiently. Investors and stakeholders may closely monitor the company's liquidity position and management strategies to address these challenges.

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Additional liquidity measure

The cash conversion cycle for Papa John's International, Inc. has shown variability over the past five years, ranging from a low of 18.19 days in 2021 to a high of 20.90 days in 2019. The trend indicates improvement in efficiency in converting inputs into cash, with a decrease in the number of days required to complete the cash conversion cycle from 20.90 days in 2019 to 19.14 days in 2023. This suggests that Papa John's has been able to manage its accounts receivable, inventory, and accounts payable more effectively over the years, leading to a quicker conversion of invested resources into cash. This is a positive sign of operational effectiveness and liquidity management within the company.