Taylor Morn Home (TMHC)

Based on the provided data for Taylor Morn Home, let's analyze the liquidity ratios:

1. Current Ratio:
- The current ratio indicates the company's ability to meet its short-term obligations with its current assets.
- In December 2020, the current ratio was exceptionally high at 37.92, signaling a strong ability to cover short-term liabilities with current assets.
- However, the current ratio decreased significantly to 13.11 by December 2021, below the industry average, which may raise concerns about liquidity.
- The ratio improved in the following years, reaching 16.03 in 2022, 31.14 in 2023, and 29.73 in 2024, indicating a recovery and a return to a more favorable liquidity position.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, measures the company's ability to cover immediate liabilities with its most liquid assets.
- Similar to the current ratio, the quick ratio shows a decline from 4.23 in 2020 to 2.02 in 2021, indicating potential liquidity challenges.
- The quick ratio improved in subsequent years, with values of 2.37 in 2022, 4.95 in 2023, and 2.79 in 2024. These values suggest better short-term liquidity compared to the previous year.

3. Cash Ratio:
- The cash ratio specifically focuses on the company's ability to pay off its current liabilities with cash and cash equivalents.
- The cash ratio mirrors the trend observed in the quick ratio, starting at 4.23 in 2020, dropping to 2.02 in 2021, and then increasing to 2.37 in 2022.
- In 2023, the cash ratio improved significantly to 4.95 before slightly decreasing to 2.79 in 2024, which still indicates a relatively strong ability to cover short-term obligations with readily available cash.

In conclusion, while Taylor Morn Home experienced fluctuations in liquidity ratios over the years, there has been an overall improvement in liquidity from 2021 onwards, suggesting a recovery in the company's ability to meet its short-term financial commitments. Further monitoring and analysis of these liquidity ratios will be important to ensure continued financial stability and operational efficiency.

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Additional liquidity measure

The cash conversion cycle for Taylor Morn Home has shown fluctuations over the years. As of December 31, 2020, the cash conversion cycle was 285.23 days, indicating a relatively long period for the company to convert its investments in inventory and other resources into cash.

Over the next few years, there was a gradual improvement in the cash conversion cycle, with decreasing values observed each year. By December 31, 2022, the cycle had reduced to 217.27 days, reflecting that the company was able to convert its resources into cash more efficiently within a shorter time frame.

However, there was a slight increase in the cash conversion cycle by December 31, 2023, when it rose to 251.65 days. This could signify potential challenges or delays in the company's cash conversion process during that specific year.

By the end of December 31, 2024, the cash conversion cycle was recorded at 264.54 days, slightly higher compared to the previous year. This may suggest that Taylor Morn Home faced some hurdles in optimizing its cash conversion efficiency during that period.

Overall, the trend in the cash conversion cycle indicates fluctuations in the company's ability to manage its working capital effectively and convert its assets into cash. It would be essential for Taylor Morn Home to analyze the underlying reasons for these fluctuations and implement strategic measures to improve and stabilize its cash conversion cycle in the future.