Viad Corp (VVI)

Liquidity ratios provide insight into a company's ability to meet its short-term obligations using its current assets. Looking at Viad Corp.'s liquidity ratios over the past five years, we can see some trends:

1. Current Ratio: The current ratio measures Viad Corp.'s ability to cover its short-term liabilities with its current assets. A current ratio of 1 indicates that the company has just enough current assets to cover its current liabilities. Viad Corp.'s current ratio has fluctuated over the years, ranging from a low of 0.48 in 2019 to a high of 1.13 in 2021 and 2022, before decreasing slightly to 1.03 in 2023. A ratio above 1 is generally considered healthy, indicating that the company can easily cover its short-term obligations.

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. Viad Corp.'s quick ratio has followed a similar trend to the current ratio, fluctuating between a low of 0.44 in 2019 to a high of 1.06 in 2021 and 2022, before decreasing to 0.95 in 2023. The quick ratio being lower than the current ratio indicates that a significant portion of Viad Corp.'s current assets is tied up in inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity ratio, measuring the company's ability to cover its current liabilities using only cash and cash equivalents. Viad Corp.'s cash ratio has shown improvement over the years, from 0.19 in 2019 to 0.53 in 2021, before declining to 0.39 in 2023. A cash ratio below 1 indicates that Viad Corp. relies on other current assets in addition to cash to meet its short-term obligations.

Overall, Viad Corp.'s liquidity ratios have shown variability over the past five years, with periods of improvement followed by slight declines. While the company has been able to maintain current assets above current liabilities, the decreasing trend in 2023 warrants further monitoring to ensure Viad Corp. remains able to meet its short-term obligations effectively.

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Additional liquidity measure

The cash conversion cycle of Viad Corp. has fluctuated over the past five years, indicating changes in the efficiency of its cash management and working capital. In 2023, the company reduced its cash conversion cycle to 16.20 days, reflecting a more efficient cash conversion process compared to the prior year. This improvement suggests that Viad Corp. has managed its cash, inventory, and accounts receivable more effectively in 2023.

However, in 2021, the cash conversion cycle increased significantly to 27.31 days, implying a longer time taken by the company to convert its investments in inventory and accounts receivable into cash. This prolonged cycle may have resulted from challenges in managing working capital efficiently, potentially impacting Viad Corp.'s liquidity and cash flow.

The variations in the cash conversion cycle from 2020 to 2021 indicate a shift in Viad Corp.'s operational efficiency, highlighting the importance of closely monitoring working capital management practices. Overall, analyzing the cash conversion cycle trend can provide valuable insights into Viad Corp.'s ability to generate and preserve cash, manage inventory effectively, and collect accounts receivable efficiently.