Sonic Automotive Inc (SAH)
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 | 1.10 | 1.12 | 1.15 | 1.12 | 1.20 | 1.02 | 1.10 | 1.10 | 1.10 | 1.03 | 1.05 | 1.00 | 1.03 | 1.01 | 0.99 | 1.06 | 0.98 | 1.04 | 1.03 | 1.03 |
| Quick ratio | 0.24 | 0.38 | 0.40 | 0.39 | 0.52 | 0.31 | 0.25 | 0.19 | 0.37 | 0.35 | 0.36 | 0.25 | 0.30 | 0.25 | 0.25 | 0.19 | 0.22 | 0.24 | 0.23 | 0.23 |
| Cash ratio | 0.01 | 0.17 | 0.20 | 0.21 | 0.27 | 0.10 | 0.07 | 0.00 | 0.16 | 0.15 | 0.15 | 0.04 | 0.09 | 0.08 | 0.07 | 0.09 | 0.01 | 0.06 | 0.05 | 0.04 |
Sonic Automotive, Inc.'s liquidity ratios have fluctuated over the past eight quarters. Looking at the current ratio, which indicates the company's ability to cover its short-term obligations with its current assets, we observe a slight downward trend from Q4 2022 to Q4 2023, decreasing from 1.20 to 1.10. This suggests that in the most recent quarter, the company may have slightly fewer current assets relative to its current liabilities.
Examining the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, we see a similar downward trend over the quarters. The quick ratio declined from 0.54 in Q4 2022 to 0.41 in Q4 2023, indicating a potential reduction in the company's ability to meet its short-term obligations without relying on selling inventory.
Furthermore, the cash ratio, which measures a company's ability to cover its short-term liabilities with its cash and cash equivalents, shows fluctuations over the quarters. There was an increase from 0.12 in Q3 2022 to 0.29 in Q4 2022, followed by a downward trend to 0.18 in Q4 2023. This suggests that Sonic Automotive, Inc. held a higher proportion of cash to its current liabilities in Q4 2022 compared to the most recent quarter.
Overall, while the current ratio, quick ratio, and cash ratio provide insights into Sonic Automotive, Inc.'s liquidity positions across the quarters, it is important to monitor these ratios consistently to assess the company's ability to meet its short-term obligations effectively.
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 | 50.92 | 44.22 | 44.76 | 44.65 | 40.89 | 39.49 | 41.56 | 41.31 | 46.57 | 32.08 | 40.17 | 53.75 | 56.78 | 51.42 | 54.16 | 66.27 | 71.60 | 71.51 | 72.50 | 73.98 |
The cash conversion cycle for Sonic Automotive, Inc. has shown a fluctuating trend over the past eight quarters. In Q4 2023, the cash conversion cycle increased to 56.41 days from 49.90 days in the previous quarter, indicating a longer time taken to convert investments in inventory and other resources into cash flows from sales. This trend of increasing the cash conversion cycle continued from its lowest point in Q3 2022 at 42.78 days.
Overall, Sonic Automotive's cash conversion cycle has been relatively stable, staying within the range of 42.78 days to 56.41 days over the past eight quarters. However, management may consider focusing on optimizing inventory management and accounts receivable processes to potentially reduce this cycle and improve the company's cash flow efficiency.