Winnebago Industries Inc (WGO)

Winnebago Industries, Inc. has demonstrated consistent liquidity strength over the past five years, as indicated by its current, quick, and cash ratios.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has exhibited a generally positive trend, reaching 2.52 in Aug 26, 2023, up from 2.10 in Aug 27, 2022. This indicates that Winnebago has ample current assets to cover its current liabilities.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also reflects favorable trends. The ratio stood at 1.33 in Aug 26, 2023, compared to 1.09 in Aug 27, 2022, signifying the company's ability to meet short-term obligations even without relying on inventory liquidation.

Moreover, the cash ratio, which focuses solely on the most liquid assets, such as cash and equivalents, reveals Winnebago's ability to cover current liabilities without relying on receivables or inventory. The cash ratio has consistently shown strength, with a value of 0.88 in Aug 26, 2023, demonstrating the company's ability to cover 88% of its current liabilities with cash and equivalents.

Overall, the trend of Winnebago's liquidity ratios suggests a strong ability to meet short-term obligations, indicating a healthy financial position in the near term.

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Additional liquidity measure

The cash conversion cycle is an important measure of efficiency in managing the company's working capital. It represents the time it takes for a company to convert its investment in inventory and other resources into cash flow from sales.

Winnebago Industries, Inc.'s cash conversion cycle has shown variability over the past five years. In the most recent period, ending August 26, 2023, the cash conversion cycle increased to 59.34 days from 46.64 days in the prior year. This indicates that the company took longer to convert its investments in inventory and accounts receivable into cash.

The trend in the cash conversion cycle can provide insights into the company's efficiency in managing its working capital. A shorter cash conversion cycle generally indicates that the company is able to generate cash from its operations more quickly, while a longer cycle may indicate inefficiencies or challenges in managing inventory, collecting receivables, or paying suppliers.

It is important for Winnebago Industries, Inc. to closely monitor and manage its cash conversion cycle to ensure optimal use of its working capital and efficient operations. Additionally, comparisons with industry averages and competitors can provide further context for evaluating the company's performance in this area.