Upbound Group Inc. (UPBD)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.17 | 0.16 | 0.34 | 0.31 | 0.42 |
| Quick ratio | 0.16 | 0.15 | 0.32 | 0.29 | 0.41 |
| Cash ratio | 0.16 | 0.15 | 0.32 | 0.29 | 0.41 |
Upbound Group Inc.'s liquidity ratios have shown a declining trend over the years based on the provided data. The current ratio, measured by dividing current assets by current liabilities, decreased from 0.42 at the end of 2020 to 0.17 at the end of 2024, indicating a diminishing ability to cover short-term liabilities with current assets.
Similarly, the quick ratio, which assesses the company's ability to meet immediate short-term obligations with its most liquid assets, also exhibited a downward trajectory from 0.41 in 2020 to 0.16 in 2024. This suggests a reduction in the company's ability to quickly settle its short-term liabilities without relying on inventory.
The cash ratio, representing the proportion of cash and cash equivalents to current liabilities, exhibited a similar declining trend from 0.41 in 2020 to 0.16 in 2024, implying a diminishing ability to pay off current obligations solely with the available cash on hand.
Overall, the decreasing trend in liquidity ratios indicates a potential liquidity strain for Upbound Group Inc. as its ability to meet short-term financial obligations continues to weaken over the years. This may raise concerns regarding the company's financial health and its capacity to manage its short-term financial commitments effectively.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 0.90 | 1.19 | 1.18 | 1.00 | 1.74 |
The cash conversion cycle of Upbound Group Inc. has exhibited a decreasing trend over the past five years. In 2020, the company's cash conversion cycle was 1.74 days, indicating that it took 1.74 days on average to convert its investments in inventory into cash receipts from sales.
By the end of 2021, the cash conversion cycle decreased to 1.00 days, reflecting an improvement in the efficiency of the company's working capital management. This trend continued in 2022 and 2023, with the cash conversion cycle hovering around 1.18 days and 1.19 days, respectively.
Notably, by the end of 2024, Upbound Group Inc. managed to further optimize its cash conversion cycle to just 0.90 days, suggesting a quicker turnaround in converting its investments into cash. Overall, the decreasing trend in the cash conversion cycle indicates the company's effective management of its operating cycle and working capital, potentially leading to improved liquidity and financial performance.