Tootsie Roll Industries Inc (TR)
Liquidity ratios
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 3.59 | 3.43 | 3.36 | 4.58 | 4.44 |
| Quick ratio | 2.39 | 2.31 | 2.51 | 3.57 | 3.58 |
| Cash ratio | 1.81 | 1.66 | 1.82 | 2.98 | 3.01 |
Tootsie Roll Industries, Inc. has shown consistent strength in its liquidity over the past five years based on its liquidity ratios. The current ratio has been above 3 in each year, indicating that the company has more than enough current assets to cover its short-term liabilities. Specifically, the current ratio increased from 3.36 in 2021 to 3.59 in 2023, showing a healthy trend in liquidity.
The quick ratio, which excludes inventory from current assets, also remained strong, with values above 2 in each year. This ratio decreased slightly from 2.66 in 2021 to 2.59 in 2023, but the overall levels suggest that Tootsie Roll has a good ability to cover its short-term obligations using its most liquid assets.
Furthermore, the cash ratio, which measures the company's ability to cover its current liabilities using only cash and cash equivalents, also indicates strong liquidity. Although the cash ratio decreased from 1.92 in 2021 to 1.90 in 2023, the company still has a prudent amount of cash on hand relative to its current liabilities.
Overall, Tootsie Roll Industries, Inc. has maintained robust liquidity positions over the years, as evidenced by consistently high current, quick, and cash ratios. This strong liquidity position suggests that the company is well equipped to meet its short-term financial obligations and indicates a solid financial foundation.
Additional liquidity measure
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 50.22 | 50.89 | 52.00 | 60.03 | 55.65 |
The cash conversion cycle (CCC) of Tootsie Roll Industries, Inc. has shown fluctuation over the past five years.
In 2023, the CCC increased to 87.05 days from 80.82 days in 2022, indicating a longer period for the company to convert its investments in inventory into cash receipts from customers. This suggests potential inefficiencies in managing the company's working capital.
In 2021, the CCC decreased to 77.45 days from 91.46 days in 2020, reflecting an improvement in the company's efficiency in managing its cash flows, inventory turnover, and accounts receivable collection.
However, the CCC in 2019 increased to 84.83 days, indicating a longer cash conversion cycle compared to the previous year. This could suggest challenges in managing working capital effectively.
Overall, Tootsie Roll Industries, Inc. should focus on optimizing its inventory turnover, speeding up accounts receivable collection, and managing accounts payable efficiently to enhance its cash conversion cycle and overall liquidity position.