Constellation Brands Inc Class A (STZ)
Liquidity ratios
| Feb 28, 2025 | Feb 29, 2024 | Feb 28, 2023 | Feb 28, 2022 | Feb 28, 2021 | |
|---|---|---|---|---|---|
| Current ratio | — | 1.19 | 1.18 | 1.23 | 2.40 |
| Quick ratio | — | 0.05 | 0.01 | 0.07 | 0.36 |
| Cash ratio | — | 0.05 | 0.01 | 0.07 | 0.36 |
Based on the provided data, the liquidity ratios of Constellation Brands Inc Class A show a mixed trend over the years.
1. Current Ratio:
- The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has decreased from 2.40 in February 2021 to 1.18 in February 2023. This implies that the company's liquidity position weakened during this period as the ratio dropped below 1, indicating potential difficulties in meeting short-term liabilities with current assets. The slight improvement to 1.19 in February 2024 suggests a partial recovery in liquidity, despite still being below the ideal ratio of 2.
2. Quick Ratio:
- The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also experienced a significant decline. It fell from 0.36 in February 2021 to 0.01 in February 2023, indicating a sharp decline in the company's ability to cover its short-term obligations with its most liquid assets. Despite a slight improvement to 0.05 in February 2024, the ratio remains at a relatively low level, reflecting ongoing liquidity challenges.
3. Cash Ratio:
- The cash ratio, which focuses solely on cash and cash equivalents as a proportion of current liabilities, showed a similar trend to the quick ratio. It dropped from 0.36 in February 2021 to 0.01 in February 2023, indicating a decline in the company's ability to pay off its short-term debts with cash on hand. The subsequent increase to 0.05 in February 2024 suggests a partial recovery but still highlights liquidity constraints.
In summary, the liquidity ratios of Constellation Brands Inc Class A demonstrate a weakening liquidity position over the specified period, as evidenced by the decreasing current, quick, and cash ratios. The company may need to focus on managing its short-term liquidity more effectively to ensure it can meet its obligations as they come due.
See also:
Additional liquidity measure
| Feb 28, 2025 | Feb 29, 2024 | Feb 28, 2023 | Feb 28, 2022 | Feb 28, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.00 | 153.43 | 147.97 | 139.60 | 113.58 |
The cash conversion cycle of Constellation Brands Inc Class A has shown an increasing trend over the years, starting at 113.58 days on February 28, 2021, and reaching 153.43 days by February 29, 2024. This indicates that the company is taking longer to convert its investments in inventory back to cash.
Interestingly, on February 28, 2025, the cash conversion cycle suddenly shows as 0.00 days. This could potentially suggest a significant improvement in the efficiency of the company's working capital management or possibly an error in reporting.
Overall, the increasing trend in the cash conversion cycle may raise concerns about the company's liquidity and efficiency in managing its cash flow. It is essential for Constellation Brands Inc Class A to closely monitor and optimize its cash conversion cycle to ensure healthy working capital management and sustainable business operations.