Papa John's International Inc (PZZA)
Liquidity ratios
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.76 | 0.82 | 0.82 | 0.90 | 0.95 | 0.91 | 0.96 | 1.03 | 0.89 | 0.85 | 0.83 | 1.14 | 1.06 | 1.07 | 0.98 | 0.86 | 0.87 | 0.88 | 0.92 | 0.91 |
| Quick ratio | 0.48 | 0.49 | 0.47 | 0.54 | 0.57 | 0.50 | 0.56 | 0.61 | 0.57 | 0.62 | 0.58 | 0.88 | 0.80 | 0.84 | 0.69 | 0.57 | 0.56 | 0.53 | 0.53 | 0.53 |
| Cash ratio | 0.13 | 0.13 | 0.15 | 0.17 | 0.18 | 0.14 | 0.21 | 0.29 | 0.25 | 0.33 | 0.30 | 0.59 | 0.45 | 0.54 | 0.33 | 0.17 | 0.13 | 0.13 | 0.15 | 0.13 |
Based on the liquidity ratios of Papa John's International, Inc. from Q1 2022 to Q4 2023, the following observations can be made:
1. Current Ratio:
The current ratio measures the company's ability to pay its short-term obligations with its current assets. The trend in Papa John's current ratio shows a gradual decline from 1.03 in Q1 2022 to 0.76 in Q4 2023. This indicates that the company's current assets may not be sufficient to cover its current liabilities adequately, potentially raising concerns about its short-term financial health.
2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more stringent measure of the company's ability to cover its short-term liabilities. Papa John's quick ratio also shows a declining trend from 0.82 in Q1 2022 to 0.64 in Q4 2023. This indicates that the company may be facing challenges in meeting its short-term obligations using its most liquid assets.
3. Cash Ratio:
The cash ratio is the most stringent liquidity measure as it considers only cash and cash equivalents relative to current liabilities. Papa John's cash ratio has also seen a decline over the period, decreasing from 0.46 in Q1 2022 to 0.27 in Q4 2023. This suggests that the company's ability to meet its short-term liabilities solely through cash holdings has weakened.
In summary, the liquidity ratios of Papa John's International, Inc. demonstrate a deteriorating liquidity position over the quarters analyzed, with a consistent decline in the current, quick, and cash ratios. It indicates a potential challenge for the company in meeting its short-term financial obligations using its available liquid assets. Further analysis and monitoring of liquidity management may be required to address these concerns and ensure the company's financial stability.
Additional liquidity measure
| Dec 31, 2023 | Sep 30, 2023 | Jun 30, 2023 | Mar 31, 2023 | Dec 31, 2022 | Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -33.73 | -22.31 | -7.18 | -25.53 | -8.37 | 14.41 | 11.77 | 19.90 | 25.31 | 5.36 | 14.03 | 10.62 | 10.82 | 11.70 | 20.40 | 14.24 | 17.88 | -8.78 | 8.92 | 3.45 |
The cash conversion cycle for Papa John's International, Inc. has shown some fluctuation over the last eight quarters. In Q2 and Q4 of 2023, the company's cash conversion cycle was relatively high at 20.26 days and 19.14 days, respectively. This indicates a longer period required for the company to convert its investments in inventory and other resources into cash.
On the other hand, the cash conversion cycle decreased in Q3 and Q1 of 2023, reaching 17.77 days and 19.80 days, respectively. This suggests an improvement in the company's efficiency in managing its working capital and converting it into cash.
Comparing the most recent quarters to the same periods in 2022, there appears to be a general trend of higher cash conversion cycles in 2023. This might indicate potential challenges in managing working capital effectively or changes in the company's operating cycle.
Overall, an analysis of Papa John's cash conversion cycle reveals fluctuations in the efficiency of its working capital management over the past eight quarters, highlighting the importance of closely monitoring and optimizing this aspect of the business for sustainable financial performance.