TripAdvisor Inc (TRIP)

TripAdvisor Inc.'s liquidity ratios show a generally positive trend over the last five years. The current ratio, which measures the firm's ability to meet short-term obligations with its current assets, has been consistently above 2, reflecting a healthy liquidity position. This indicates that TripAdvisor has more than enough current assets to cover its current liabilities.

Similarly, the quick ratio, also known as the acid-test ratio, is at the same level as the current ratio, indicating that the company has a strong ability to meet its short-term obligations without relying on inventory. This suggests that TripAdvisor can handle unexpected financial needs or a downturn in business without liquidity issues.

The cash ratio, which measures the firm's ability to cover its current liabilities with its cash and cash equivalents, has shown an upward trend, indicating an improvement in the company's ability to settle its short-term obligations solely with cash on hand. This demonstrates a solid financial position and a reduced reliance on other current assets to meet obligations.

Overall, TripAdvisor Inc.'s liquidity ratios suggest that the company has maintained a strong liquidity position over the years, with adequate resources to meet its short-term financial commitments and withstand potential financial challenges.

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Additional liquidity measure

The cash conversion cycle of TripAdvisor Inc. has exhibited significant fluctuations over the past five years. In 2019, the company had a minimal cash conversion cycle of 0.10 days, indicating efficient management of cash flow and working capital. However, there was a notable increase in the cash conversion cycle to -39.08 days in 2020, suggesting a slight delay in the company's conversion of inventory and receivables to cash.

The cash conversion cycle further worsened in 2021, reaching -55.89 days, and then deteriorated significantly to -72.56 days in 2022. These negative values imply that TripAdvisor Inc. is able to convert its inventory and receivables into cash before paying its liabilities, which may raise concerns about the company's operational efficiency and cash management.

The most recent data from December 31, 2023, indicates an improvement in the cash conversion cycle to -29.40 days, suggesting a more efficient management of cash flow compared to the previous year. However, it is important to note that a negative cash conversion cycle may also reflect aggressive payment terms to suppliers, which could potentially strain supplier relationships in the long term.

Overall, TripAdvisor Inc. has experienced fluctuations in its cash conversion cycle over the years, with negative values indicating rapid conversion of assets into cash. However, a sustained negative cash conversion cycle may require further examination to assess the underlying factors impacting the company's cash management practices.