Sturm Ruger & Company Inc (RGR)

Sturm, Ruger & Co., Inc. has demonstrated a consistently strong liquidity position over the past five years based on its current ratio, quick ratio, and cash ratio. The current ratio, which measures the firm's ability to cover its short-term liabilities with its current assets, has experienced fluctuations but generally remained well above 1. A current ratio of 4.29 as of December 31, 2023, indicates that the company had $4.29 in current assets for every $1 in current liabilities, representing a significant improvement from the previous year.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Sturm, Ruger & Co., Inc. consistently maintained a strong quick ratio above 1, with a ratio of 3.03 as of December 31, 2023, indicating that the company had ample liquid assets to cover its short-term obligations without relying on selling inventory.

Furthermore, the cash ratio, which specifically focuses on the company's ability to cover its current liabilities using its cash and cash equivalents, shows a solid cash position over the years. With a cash ratio of 2.08 as of December 31, 2023, the company had $2.08 in cash and marketable securities for every $1 in current liabilities, indicating a healthy level of liquidity.

Overall, the liquidity ratios of Sturm, Ruger & Co., Inc. suggest that the company has efficiently managed its working capital and maintained a robust ability to meet its short-term obligations, reflecting a stable financial position.

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Additional liquidity measure

Sturm, Ruger & Co., Inc.'s cash conversion cycle has shown fluctuations over the past five years. In 2023, the company's cash conversion cycle increased to 101.33 days from 85.49 days in the previous year. This prolonged cycle suggests that the company took longer to convert its investment in inventory into cash received from sales.

Comparing this to the trend over the past five years, there was a significant increase from 2021 to 2023. This may indicate inefficiencies in managing inventory, collection of receivables, or payment of payables.

In 2022, there was a slight increase in the cash conversion cycle compared to 2021. Notably, in 2021, the company had a relatively low cash conversion cycle of 54.09 days, indicating efficient management of working capital components. This was an improvement from 2020 when the cash conversion cycle was slightly higher at 52.88 days.

In 2019, the cash conversion cycle was 70.24 days, showing an increase compared to 2021 and 2020 but lower than the figures seen in 2022 and 2023. Overall, Sturm, Ruger & Co., Inc. should focus on optimizing its working capital management practices to shorten its cash conversion cycle and improve overall liquidity and efficiency.