Skyline Corporation (SKY)

Skyline Corporation's liquidity ratios indicate the company's ability to meet its short-term obligations and manage its cash flow effectively.

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets.
- Over the observation period, the current ratio shows fluctuations. It increased from 1.90 in March 31, 2021, to 4.19 in March 31, 2023, indicating a significant improvement in liquidity.
- However, in March 31, 2024, the ratio decreased to 2.36, and in March 31, 2025, it dropped to 0.00, which suggests a potential liquidity issue in the most recent year.

2. Quick Ratio:
- The quick ratio is a more stringent measure of liquidity as it excludes inventory from current assets, focusing only on the most liquid assets.
- Similar to the current ratio, the quick ratio shows fluctuations over time. It increased from 1.21 in March 31, 2021, to 3.27 in March 31, 2023, reflecting an improvement in the company's ability to meet short-term obligations.
- However, the quick ratio declined to 1.44 in March 31, 2024, and dropped to 0.00 in March 31, 2025, indicating a potential liquidity challenge in the most recent year.

3. Cash Ratio:
- The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents.
- Skyline Corporation's cash ratio also displays fluctuations over the years. It increased from 1.00 in March 31, 2021, to 3.00 in March 31, 2023, indicating an improvement in the company's cash position.
- However, in the most recent year, March 31, 2025, the cash ratio dropped to 0.00, signaling a potential liquidity constraint due to a lack of sufficient cash reserves to cover immediate obligations.

In conclusion, while Skyline Corporation demonstrated improvements in liquidity ratios in certain years, the company experienced a liquidity challenge in the most recent period, as evidenced by the declining current, quick, and cash ratios. These fluctuations suggest that the company may need to closely monitor its cash flow management and working capital position to ensure its ability to meet short-term financial obligations.

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Additional liquidity measure

The cash conversion cycle measures how long it takes for a company to convert its investments in inventory and other resources into cash flows from sales. Looking at the trend for Skyline Corporation's cash conversion cycle from March 31, 2021, to March 31, 2025, we observe fluctuations in the company's efficiency in managing its working capital.

In March 2021, the cash conversion cycle stood at 49.84 days, indicating that the company took approximately 50 days to convert its resources into cash. By March 2023, Skyline Corporation had improved its efficiency, reducing the cycle to 41.58 days, suggesting a faster conversion of investments into cash flows.

However, the trend reversed in March 2024 when the cash conversion cycle spiked to 75.19 days, significantly surpassing previous levels. This considerable increase may indicate challenges in managing working capital efficiently, potentially leading to liquidity issues or inefficiencies in the company's operations.

The data for March 31, 2025, showing a cash conversion cycle of 0.00 days, may be an anomaly or error, as it is highly unlikely for a company to have a zero-day cash conversion cycle. This data point should be verified for accuracy.

Overall, Skyline Corporation's cash conversion cycle has shown variability over the years, with periods of improvement and deterioration. It is essential for the company to consistently monitor and manage its working capital effectively to ensure optimal cash flow and operational efficiency.