Boston Beer Company Inc (SAM)

Boston Beer Company Inc's liquidity ratios show varying trends over the past five years.

1. Current Ratio:
The company's current ratio has fluctuated during the period under review. It decreased from 1.59 in 2020 to 1.35 in 2021, indicating a slight decrease in the company's ability to cover its short-term obligations. However, the ratio improved significantly in 2022 and 2023, reaching 2.07 and 2.25 respectively, suggesting better liquidity and the ability to meet current liabilities comfortably. The ratio slightly decreased to 1.80 in 2024, but still indicates a relatively strong liquidity position.

2. Quick Ratio:
Boston Beer's quick ratio has shown a more volatile trend compared to the current ratio. The ratio dropped from 0.97 in 2020 to 0.53 in 2021, indicating a significant decrease in the company's ability to cover its immediate liabilities without relying on inventory. However, the ratio improved in 2022 and 2023, reaching 1.21 and 1.64 respectively, suggesting better liquidity and a stronger ability to cover short-term obligations. The ratio remained stable at 1.21 in 2024, indicating some level of stability in the company's liquidity position.

3. Cash Ratio:
The cash ratio of Boston Beer Company Inc has also shown fluctuations over the five-year period. The ratio decreased from 0.63 in 2020 to 0.11 in 2021, indicating a significant decline in the company's ability to cover its short-term liabilities with cash alone. However, the ratio improved notably in 2022 and 2023, reaching 0.88 and 1.34 respectively, indicating a strong ability to cover immediate obligations with cash. The ratio slightly decreased to 0.91 in 2024, but still indicates a healthy liquidity position.

In summary, Boston Beer Company Inc's liquidity ratios have shown mixed performance over the past five years, with some years demonstrating strong liquidity positions while others showing a decrease. Overall, the company's liquidity ratios suggest a varying ability to meet short-term obligations, with improvements in certain years and some room for further enhancement in others.

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Additional liquidity measure

The cash conversion cycle of Boston Beer Company Inc has shown fluctuations over the years. As of December 31, 2020, the company had a cash conversion cycle of 22.32 days, indicating that it took around 22 days to convert its investments in inventory back into cash.

By December 31, 2021, the cash conversion cycle had increased to 37.55 days, suggesting a longer period required to convert inventory into sales and eventually cash. However, there was an improvement by December 31, 2022, with the cycle decreasing to 30.74 days, indicating a more efficient management of working capital.

The trend continued to improve as of December 31, 2023, where the cash conversion cycle reduced further to 21.49 days, signaling enhanced efficiency in converting inventory to cash flow. As of December 31, 2024, the cycle remained relatively stable at 22.09 days, indicating consistent performance in managing cash flow.

Overall, Boston Beer Company Inc has shown fluctuations in its cash conversion cycle, with periods of improvement and stability. It is essential for the company to continue monitoring and managing its cash conversion cycle to optimize working capital efficiency.