Papa John's International Inc (PZZA)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.83 | 0.76 | 0.95 | 0.89 | 1.06 |
| Quick ratio | 0.14 | 0.13 | 0.18 | 0.25 | 0.45 |
| Cash ratio | 0.14 | 0.13 | 0.18 | 0.25 | 0.45 |
Papa John's International Inc's liquidity ratios have shown a declining trend over the years.
1. Current Ratio: The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has decreased from 1.06 in 2020 to 0.83 in 2024. This indicates a weakening liquidity position as the current assets are no longer sufficient to cover current liabilities.
2. Quick Ratio: The quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, has also dropped significantly from 0.45 in 2020 to 0.14 in 2024. This indicates a sharp decline in the company's ability to meet immediate obligations without relying on selling inventory.
3. Cash Ratio: The cash ratio, the most conservative measure of liquidity focusing solely on cash and cash equivalents, has followed a similar trend, decreasing from 0.45 in 2020 to 0.14 in 2024. This suggests a reduced ability to cover short-term liabilities with cash on hand alone.
Overall, the downward trend in these liquidity ratios raises concerns about Papa John's ability to meet its short-term financial commitments and may indicate potential challenges in managing cash flow and working capital efficiently.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 8.70 | 8.92 | 8.82 | 7.79 | 7.52 |
The cash conversion cycle of Papa John's International Inc has shown a slight increase over the years, from 7.52 days as of December 31, 2020, to 8.70 days as of December 31, 2024. This indicates that the company is taking slightly longer to convert its investments in inventory back into cash. While the trend is generally increasing, it is still within a relatively narrow range, suggesting that Papa John's is managing its working capital efficiently. An increase in the cash conversion cycle could be attributed to various factors such as changes in inventory management, accounts receivable collection, or accounts payable turnover. Overall, a thorough assessment of the operational efficiency and cash flow management of the company would provide a more comprehensive understanding of its financial health.