Tractor Supply Company (TSCO)

Liquidity ratios

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Current ratio 1.50 1.52 1.60 1.47 1.33 1.48 1.44 1.44 1.57 1.69 1.71 1.71 1.87 1.49 1.40 1.66 1.43 1.60 1.52 1.58
Quick ratio 0.18 0.18 0.28 0.08 0.09 0.10 0.24 0.18 0.43 0.54 0.68 0.58 0.77 0.52 0.56 0.31 0.07 0.07 0.08 0.08
Cash ratio 0.18 0.18 0.28 0.08 0.09 0.10 0.24 0.18 0.43 0.54 0.68 0.58 0.77 0.52 0.56 0.31 0.07 0.07 0.08 0.08

Tractor Supply Company's liquidity ratios have shown fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term obligations with its current assets, has been relatively stable overall, averaging around 1.50 to 1.60. This indicates that Tractor Supply has generally had enough current assets to meet its current liabilities.

In contrast, the quick ratio, also known as the acid-test ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has been more volatile. The ratio has ranged from 0.07 to 0.77, indicating fluctuations in Tractor Supply's ability to meet its short-term obligations without relying on inventory.

The cash ratio, which is the strictest measure of liquidity as it only considers cash and equivalents to cover current liabilities, has also exhibited variability, ranging from 0.07 to 0.77. This suggests that while Tractor Supply has had varying levels of cash reserves to satisfy immediate obligations, there have been instances of lower cash levels relative to short-term liabilities.

Overall, while the current ratio indicates a generally stable liquidity position for Tractor Supply, the quick and cash ratios highlight fluctuations and potential challenges in the company's ability to quickly meet short-term obligations without relying on inventory or non-cash assets. Analysis of all three ratios together provides a more comprehensive insight into Tractor Supply's liquidity position.

Additional liquidity measure

Dec 31, 2023 Sep 30, 2023 Jun 30, 2023 Mar 31, 2023 Dec 31, 2022 Sep 30, 2022 Jun 30, 2022 Mar 31, 2022 Dec 31, 2021 Sep 30, 2021 Jun 30, 2021 Mar 31, 2021 Dec 31, 2020 Sep 30, 2020 Jun 30, 2020 Mar 31, 2020 Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019
Cash conversion cycle days 57.37 54.05 53.06 58.44 51.84 60.58 51.03 53.21 45.79 23.32 18.26 21.81 20.18 48.74 41.26 66.70 63.92 75.92 71.27 75.55

The cash conversion cycle for Tractor Supply Company has shown fluctuation over the recent quarters. From December 31, 2018 to September 30, 2019, the cash conversion cycle increased from 75.55 days to 23.32 days. This significant decrease indicates an improvement in the company's efficiency in converting its resources into cash during that period.

However, the cash conversion cycle started to increase again from September 30, 2019, reaching a peak of 66.70 days on March 31, 2020. This suggests that there may have been challenges in managing the company's working capital effectively during that time.

From March 31, 2020 to December 31, 2023, the cash conversion cycle fluctuated within a range of approximately 50 to 60 days. The latest figure, 57.37 days as of December 31, 2023, indicates that Tractor Supply Company takes on average 57.37 days to convert its inventory into sales and then collect cash from customers.

Overall, a lower cash conversion cycle is generally preferred as it indicates efficiency in managing working capital. Tractor Supply Company should continue to monitor and manage its cash conversion cycle to ensure optimal utilization of its resources and maintain strong liquidity levels.