RBC Bearings Incorporated (RBC)

RBC Bearings Incorporated's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations. The current ratio reflects the company's ability to cover its short-term liabilities with its current assets.

Over the past five years, RBC Bearings' current ratio has experienced fluctuations, ranging from 2.95 to 8.25. The current ratio has generally been above 1, indicating that the company has had sufficient current assets to cover its current liabilities. The increasing trend in recent years, with the current ratio peaking at 8.25 in 2021, suggests improvement in the company's liquidity position.

The quick ratio measures the company's ability to meet its short-term obligations using its most liquid assets, excluding inventory. RBC Bearings' quick ratio has also shown variability over the years, ranging from 0.99 to 3.99. A ratio above 1 is generally considered favorable, indicating that the company has an adequate level of highly liquid assets to cover its short-term liabilities. Notably, the sharp increase in the quick ratio in 2021 to 3.99 suggests a significant improvement in the company's liquidity position.

The cash ratio provides a more stringent measure of liquidity, representing the proportion of current liabilities covered by cash and cash equivalents. RBC Bearings' cash ratio has ranged from 0.00 to 0.58 over the period under review. The 2021 cash ratio of 2.74 stands out as particularly strong, indicating a substantial cash reserve relative to its current liabilities.

Overall, the liquidity ratios of RBC Bearings Incorporated have displayed positive trends in recent years, with improvements in the current ratio, quick ratio, and cash ratio. These ratios indicate that the company has generally maintained a healthy liquidity position and the ability to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of RBC Bearings Incorporated has fluctuated over the past five years. In the latest fiscal year ending on March 31, 2024, the company's cash conversion cycle was 267.51 days, showing an improvement from the previous year.

The cash conversion cycle for RBC Bearings Incorporated was at its lowest point on March 31, 2023, at 245.46 days, indicating that the company was able to convert its investments in inventory into cash more efficiently during that period.

Conversely, on March 31, 2021, the cash conversion cycle was at its highest point over the past five years, at 385.37 days. This indicates that the company took a longer time to convert its investments in inventory into cash, potentially affecting its liquidity and working capital management.

Overall, monitoring the cash conversion cycle is crucial for RBC Bearings Incorporated to optimize its inventory management, accounts receivable collection, and accounts payable payment schedules to enhance cash flow efficiency and maintain healthy liquidity levels in the long term.