Rush Enterprises A Inc (RUSHA)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.45 | 1.35 | 1.31 | 1.32 | 1.32 |
| Quick ratio | 0.36 | 0.28 | 0.32 | 0.31 | 0.50 |
| Cash ratio | 0.14 | 0.11 | 0.14 | 0.15 | 0.30 |
Rush Enterprises A Inc's liquidity ratios show varying levels of liquidity over the years.
- The current ratio has remained relatively stable around 1.3 to 1.4 from 2020 to 2024, indicating that the company has enough current assets to cover its current liabilities. This suggests a moderate level of liquidity.
- The quick ratio, on the other hand, has experienced fluctuations, dropping from 0.50 in 2020 to 0.28 in 2023 before slightly recovering to 0.36 in 2024. This indicates that the company may have faced challenges in meeting its short-term obligations using only its quick assets.
- The cash ratio has consistently been below 1 over the years, signifying that Rush Enterprises A Inc has a low level of cash and cash equivalents compared to its current liabilities. This may indicate potential cash flow constraints and limited ability to cover immediate liabilities with cash on hand.
Overall, while the current ratio suggests a moderate level of liquidity, the declining trend in the quick and cash ratios indicates potential liquidity challenges that the company may need to address in order to better meet its short-term obligations.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 106.81 | 107.53 | 94.64 | 93.07 | 85.83 |
Over the past five years, Rush Enterprises A Inc's cash conversion cycle has shown a gradual increase, indicating a lengthening time period required for the company to convert its investments in inventory and accounts receivable into cash. The trend from 85.83 days on December 31, 2020, to 106.81 days on December 31, 2024, suggests a deteriorating efficiency in managing its working capital.
The year-on-year increase in the cash conversion cycle reflects potential issues such as slower inventory turnover, longer accounts receivable collection period, or delays in paying accounts payable. This trend could negatively impact the company's liquidity and working capital management, as a longer cash conversion cycle ties up more capital in non-liquid assets.
Rush Enterprises A Inc should closely monitor and analyze the components of its cash conversion cycle to identify areas for improvement and implement strategies to streamline operations, optimize inventory levels, and enhance cash flow. Addressing inefficiencies in the cash conversion cycle can lead to improved financial performance and overall operational effectiveness for the company.