Travel + Leisure Co (TNL)

Travel + Leisure Co's current ratio has fluctuated over the past years, indicating variations in its liquidity position. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, ranged from a low of 1.00 to a high of 3.72. While a ratio above 1 indicates the company can meet its short-term liabilities, a higher ratio suggests a stronger liquidity position.

On the other hand, the quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventory from current assets. Travel + Leisure Co's quick ratio fluctuated between 0.13 and 1.71. A quick ratio below 1 may indicate potential difficulties in meeting short-term obligations without selling inventory, while a higher ratio is generally preferred.

The cash ratio, which measures how well a company can cover its current liabilities with its most liquid assets, like cash and cash equivalents, also demonstrated fluctuations for Travel + Leisure Co, ranging from 0.13 to 1.71. A higher cash ratio implies a stronger ability to cover short-term liabilities solely with cash, highlighting a more secure liquidity position.

Overall, analyzing these liquidity ratios collectively provides insights into Travel + Leisure Co's ability to meet short-term obligations and manage liquidity risk, with fluctuations suggesting changing liquidity conditions that may require careful monitoring and management to ensure financial stability.

---

Additional liquidity measure

The cash conversion cycle of Travel + Leisure Co has exhibited fluctuations over the past several quarters. The cash conversion cycle, a key indicator of a company's efficiency in managing its working capital, measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In March 2020, the company's cash conversion cycle stood at 3,585.24 days, indicating a prolonged cycle that may have been impacted by various factors such as inventory management, accounts receivable collection, and accounts payable turnover. However, this figure experienced a significant increase to 8,183.68 days by June 2020, suggesting potential challenges in liquidity management during that period.

Subsequently, there was a sharp rise to 25,569.21 days in September 2020, which could signal difficulties in converting investments into cash efficiently. The company managed to improve its cash conversion cycle significantly by December 2020, reducing it to 336.29 days, which may have been attributed to more streamlined operations or improved working capital management practices.

From March 2021 to December 2024, the cash conversion cycle generally trended downwards, indicating enhanced efficiency in converting investments into cash. The cycle ranged from 188.90 days to 282.82 days over these quarters, with a gradual improvement towards more optimal levels.

Overall, the company's cash conversion cycle has shown variability over the analyzed period, reflecting changes in working capital management practices and operational efficiency. Monitoring this metric can provide insights into Travel + Leisure Co's ability to efficiently manage its cash flows and working capital to support its business operations and growth initiatives.