Marriot Vacations Worldwide (VAC)

Marriott Vacations Worldwide's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a decreasing trend over the years, from 4.49 in 2020 to 3.14 in 2024. While the current ratio remains above 1, indicating that the company can cover its current liabilities, the decreasing trend suggests a potential decline in liquidity.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also shown a decreasing trend, from 0.61 in 2020 to 0.15 in 2024. This indicates that the company may have difficulty meeting its short-term obligations using its most liquid assets.

Similarly, the cash ratio, which measures the company's ability to pay off its current liabilities with cash and cash equivalents, has also decreased from 0.61 in 2020 to 0.15 in 2024. This suggests that Marriott Vacations Worldwide may have limited cash resources relative to its short-term liabilities.

Overall, the decreasing trend in all three liquidity ratios raises concerns about Marriott Vacations Worldwide's ability to maintain sufficient liquidity to meet its short-term obligations in the future. Management should closely monitor these ratios and take appropriate actions to improve liquidity if necessary.

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Additional liquidity measure

Based on the data provided, Marriot Vacations Worldwide has displayed a decreasing trend in its cash conversion cycle over the past five years. In December 31, 2020, the cash conversion cycle was 128.44 days, which decreased to 107.69 days in December 31, 2021, further decreasing to 89.79 days by December 31, 2022. The trend continued with a reduction to 79.55 days by December 31, 2023, before slightly increasing to 86.21 days by December 31, 2024.

The decreasing trend in the cash conversion cycle indicates that the company has been able to more efficiently manage its working capital and convert its investments in inventory and receivables to cash more quickly over the years. This can be a positive sign as it suggests enhanced liquidity and potentially improved operational efficiency within the business.

It is important for Marriot Vacations Worldwide to continue monitoring and managing its cash conversion cycle to ensure optimal working capital management and sustainable financial performance in the future.