Taylor Morn Home (TMHC)

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

1. Current Ratio:
- The current ratio measures the company's ability to cover its short-term liabilities with its short-term assets. A higher current ratio indicates a stronger liquidity position.
- Taylor Morn Home's current ratio fluctuated over the years, ranging from a high of 43.48 on September 30, 2020, to a low of 13.11 on December 31, 2021. This downward trend indicates potential liquidity challenges during that period.
- While the current ratio improved to 32.33 on March 31, 2023, and then decreased to 21.06 on September 30, 2024, the company's liquidity position seems to be somewhat volatile.

2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, excludes inventory from current assets to provide a more conservative measure of liquidity.
- Taylor Morn Home's quick ratio showed a similar pattern to the current ratio, with fluctuations over time. It ranged from a low of 0.89 on June 30, 2024, to a high of 6.00 on March 31, 2023.
- A quick ratio below 1 may indicate potential difficulties in meeting short-term obligations without relying on inventory sales.

3. Cash Ratio:
- The cash ratio is the most conservative liquidity metric, measuring the company's ability to cover its current liabilities with cash and cash equivalents alone.
- Taylor Morn Home's cash ratio followed a comparable trend to the quick and current ratios, with fluctuations in values over the reporting periods.
- The cash ratio ranged from 0.89 on June 30, 2024, to 6.00 on March 31, 2023, indicating the company's capacity to cover its short-term obligations with cash on hand varied significantly.

In conclusion, Taylor Morn Home's liquidity ratios suggest that while the company has had periods of strong liquidity, there have been instances of potential liquidity challenges as well. Management should closely monitor and manage the company's liquidity position to ensure it can meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Taylor Morn Home has shown fluctuations over the reporting periods. Initially, the cash conversion cycle was relatively high, indicating a longer period required to convert resources into cash. However, there has been a gradual improvement in the efficiency of the company's cash conversion cycle over the last few quarters.

As of December 31, 2024, the cash conversion cycle stood at 264.54 days. This implies that it takes the company approximately 264.54 days to convert its investments in inventory and other resources into cash receipts from sales. A decreasing trend in the cash conversion cycle suggests that Taylor Morn Home has been able to manage its working capital more effectively, potentially by managing inventory levels, optimizing accounts payable and receivable, and streamlining operational processes.

The significant reduction in the cash conversion cycle from 355.31 days on March 31, 2020, to 264.54 days on December 31, 2024, indicates a positive trend in the company's liquidity and operational efficiency. It signals that Taylor Morn Home has been able to improve its cash flow management, which may lead to better financial performance and sustainable growth in the future.