Vista Outdoor Inc (VSTO)

Looking at Vista Outdoor Inc's liquidity ratios over the past five years, we can see the following trends:

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Vista Outdoor Inc's current ratio has shown a slight fluctuation but generally remained above 2. This indicates that the company has a strong ability to meet its short-term liabilities with its current assets.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. Vista Outdoor Inc's quick ratio has shown some variation over the years, with a significant decrease in 2023 and 2022. A ratio above 1 is generally considered healthy, but the ratios for Vista Outdoor Inc have been below 1 in recent years, indicating a lower level of liquidity to cover short-term liabilities without relying on inventory.

3. Cash Ratio: The cash ratio is the most conservative measure of liquidity, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents. Vista Outdoor Inc's cash ratio has been relatively low compared to the other liquidity ratios, with a notable increase in 2021. A cash ratio below 1 indicates that the company may have some difficulty in meeting its short-term obligations solely with cash.

Overall, Vista Outdoor Inc has maintained a strong current ratio, indicating a healthy ability to cover short-term liabilities with current assets. However, the quick ratio and cash ratio suggest that the company may have some limitations in meeting short-term obligations without relying on inventory or non-cash assets. This analysis highlights the importance of considering multiple liquidity ratios to gain a comprehensive understanding of a company's liquidity position.

---

Additional liquidity measure

The cash conversion cycle of Vista Outdoor Inc has fluctuated over the past five years, with Mar 31, 2024 showing an improvement compared to the previous year. The company took 107.61 days on average to convert its investments in raw materials and other inputs into cash received from sales during the fiscal year ending on Mar 31, 2024. This cycle was shorter than in the prior year (121.55 days) and also lower than the cycle observed in Mar 31, 2022 at 118.74 days.

The cash conversion cycle measures how efficiently a company manages its working capital components, including inventory, accounts receivable, and accounts payable. A shorter cash conversion cycle indicates that the company is able to quickly convert its investments into sales, collect cash from customers, and pay off its obligations.

Overall, Vista Outdoor Inc has shown some improvement in its management of working capital efficiency as indicated by the decrease in the cash conversion cycle in Mar 31, 2024 compared to earlier years. However, further analysis and comparison with industry benchmarks would be necessary to fully assess its working capital management performance.