Toll Brothers Inc (TOL)

Toll Brothers Inc has demonstrated consistently strong liquidity positions over the past five years based on the current ratio, quick ratio, and cash ratio. The current ratio indicates the company's ability to cover its short-term obligations with its current assets. From 2020 to 2024, Toll Brothers' current ratio has ranged from 4.24 to 12.26, with the latest figure standing at 6.93 as of October 31, 2024. This implies that Toll Brothers has more than enough current assets to meet its short-term liabilities.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has been robust over the years. The quick ratio has been consistently high, ranging from 5.32 to 12.26, mirroring the strength of Toll Brothers' liquidity position.

Furthermore, the cash ratio, which assesses a company's ability to cover its short-term liabilities with its cash and cash equivalents, also reflects Toll Brothers' strong liquidity position. The ratio has consistently been well above 1, indicating a comfortable level of cash reserves to meet immediate obligations.

Overall, Toll Brothers Inc's liquidity ratios suggest that the company is well-equipped to meet its short-term financial commitments and has maintained a healthy level of liquidity over the years, which enhances its ability to navigate uncertain economic environments and capitalize on potential growth opportunities.

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Additional liquidity measure

The cash conversion cycle of Toll Brothers Inc has shown variability over the past five years. In the most recent fiscal year ending October 31, 2024, the cash conversion cycle was 399.27 days, representing a slight increase compared to the previous year. This indicates that Toll Brothers took longer to convert its investments in raw materials into cash from sales.

The trend over the five-year period indicates that the cash conversion cycle has fluctuated, with improvements seen in the fiscal year ending October 31, 2022, where the cycle was at its lowest at 363.32 days. However, there was a significant increase in the cycle in the fiscal year ending October 31, 2020, where it peaked at 428.27 days, suggesting challenges in managing inventory, accounts receivable, and accounts payable efficiently.

Overall, Toll Brothers should focus on optimizing its inventory management, speeding up collection of receivables, and effectively managing payables to improve its cash conversion cycle and enhance its overall liquidity and financial performance.