Yelp Inc (YELP)

The liquidity ratios of Yelp Inc have shown consistency and strength over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been consistently high, with values ranging from 3.26 to 4.98. This indicates that Yelp Inc has more than enough current assets to cover its current liabilities.

Similarly, the quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, shows a pattern of stability and strength, mirroring the current ratio values across the years.

The cash ratio, which specifically measures the ability of a company to cover its short-term liabilities with its cash and cash equivalents, also demonstrates a healthy trend for Yelp Inc. The cash ratio values have ranged from 2.54 to 4.36 over the past five years, indicating that the company maintains a strong cash position relative to its short-term obligations.

Overall, the liquidity ratios of Yelp Inc suggest that the company is well-positioned to meet its short-term financial obligations and has a solid liquidity position, which is important for financial stability and operational flexibility.

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Additional liquidity measure

The cash conversion cycle of Yelp Inc has shown significant fluctuations over the past five years. In 2023, the company's cash conversion cycle is 1.97 days, indicating that it takes Yelp approximately 1.97 days to convert its investments in inventory into cash from sales. This shows an improvement compared to the previous year where the company had a negative cash conversion cycle of -9.82 days, implying that Yelp was efficient in collecting payments from customers and managing inventory in 2022.

However, looking back over the five-year period, Yelp experienced significant variability in its cash conversion cycle. In 2021, the company had a negative cash conversion cycle of -37.40 days, indicating that Yelp was able to convert its investments into cash quickly and efficiently that year. In contrast, Yelp faced a positive cash conversion cycle in 2020 and 2019, with 19.54 days and 3.35 days, respectively. This suggests that Yelp took a longer time to convert investments into cash during those years.

Overall, the analysis of Yelp Inc's cash conversion cycle reveals a fluctuating trend in the company's ability to manage its working capital effectively and convert investments into cash. It is important for Yelp to focus on optimizing its operational efficiency and managing its cash flows to ensure a healthy and sustainable cash conversion cycle in the future.