Texas Roadhouse Inc (TXRH)

The liquidity ratios of Texas Roadhouse Inc indicate a declining trend over the analyzed period.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, decreased from 1.01 in 2020 to 0.62 in 2024. This downward trend suggests a potential strain on the company's short-term financial obligations.

The quick ratio, also known as the acid-test ratio, reflects the company's ability to meet its immediate short-term liabilities using its most liquid assets. Similarly, this ratio decreased from 0.72 in 2020 to 0.30 in 2024, indicating a reduced ability to cover short-term obligations without relying on inventory.

Furthermore, the cash ratio, which focuses solely on a company's cash and cash equivalents to cover its current liabilities, also experienced a decline from 0.72 in 2020 to 0.30 in 2024. This indicates that Texas Roadhouse may have a lower level of cash readily available to meet its short-term financial obligations.

Overall, the decreasing trend in these liquidity ratios suggests a potential liquidity risk for Texas Roadhouse Inc. It's important for the company to closely monitor and manage its liquidity position to ensure it can meet its short-term financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Texas Roadhouse Inc has shown a slightly increasing trend from 3.86 days in December 2020 to 4.13 days in December 2022. However, there was a noticeable improvement in December 2023, with the cycle decreasing to 3.59 days, and a further decrease to 3.36 days in December 2024. This indicates that the company has been able to manage its cash conversion efficiency more effectively in recent years. A lower cash conversion cycle suggests that Texas Roadhouse Inc is taking less time to convert its investments in inventory and other resources into cash inflows, which is a positive sign for its liquidity and operational efficiency.