Constellation Brands Inc Class A (STZ)

The current ratio of Constellation Brands Inc Class A has shown some fluctuation over the reported period, ranging from a high of 2.40 on February 28, 2021, to a low of 0.92 on February 28, 2025. Generally, a current ratio above 1 indicates that the company has more current assets than current liabilities to cover its short-term obligations. However, a declining trend in the current ratio may suggest potential liquidity challenges in meeting short-term liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Constellation Brands Inc Class A's quick ratio fluctuated significantly, with values ranging from -0.03 on May 31, 2022, to 1.53 on May 31, 2021. A quick ratio above 1 indicates that the company can meet its short-term obligations without relying on the sale of inventory. However, negative values or values approaching zero, as seen in some periods, may raise concerns about the company's ability to cover immediate liabilities.

The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, shows a similar pattern to the quick ratio for Constellation Brands Inc Class A. Notably, the cash ratio remained positive throughout the reported period, signaling the company's ability to meet a portion of its short-term obligations with cash on hand. However, the values of the cash ratio were generally lower compared to the current and quick ratios, reflecting a reliance on other current assets to cover short-term liabilities.

Overall, the liquidity ratios of Constellation Brands Inc Class A highlight the importance of monitoring not only the current ratio but also the quick and cash ratios to assess the company's ability to manage short-term financial obligations effectively. Fluctuations in these ratios can provide insights into the company's liquidity position and potential challenges in meeting short-term liabilities.

---

See also:

Constellation Brands Inc Class A Liquidity Ratios (Quarterly Data)

---

Additional liquidity measure

Constellation Brands Inc Class A's cash conversion cycle has exhibited fluctuations over the period analyzed. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

From May 31, 2020, to February 28, 2025, the cash conversion cycle varied from a low of 106.83 days to a high of 155.87 days. Generally, a longer cash conversion cycle indicates a slower conversion of investments into cash, potentially tying up capital and affecting liquidity.

The trend observed shows some periods of improvement in efficiency, as indicated by lower days in the cycle, but also periods of deterioration with higher days in the cycle. This could be influenced by factors such as changes in inventory management, sales processes, or payment terms with suppliers and customers.

It is essential for Constellation Brands Inc Class A to closely monitor its cash conversion cycle to ensure optimal working capital management, efficient operations, and sustained cash flows. A shorter cash conversion cycle typically signifies better liquidity and operational efficiency.