YETI Holdings Inc (YETI)

YETI Holdings Inc has shown a generally improving trend in its liquidity ratios over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, increased steadily from 1.66 in 2020 to 2.18 in 2024. This indicates that YETI has a strong current asset base relative to its current liabilities, allowing it to meet its short-term obligations comfortably.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. YETI's quick ratio fluctuated over the five-year period, with a low of 0.77 in 2022 and a high of 1.34 in 2023. Although there was some variability, the quick ratio generally remained above 1, implying that the company has an adequate level of liquid assets to cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most conservative liquidity metric as it only considers cash and cash equivalents, also demonstrated an increasing trend from 0.88 in 2020 to 0.95 in 2024. This indicates that YETI has been maintaining a higher proportion of cash relative to its current liabilities, which provides a strong cushion in case of unexpected cash needs.

Overall, YETI Holdings Inc's liquidity ratios suggest that the company has been effectively managing its short-term obligations and maintaining a solid financial position over the past five years.

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Additional liquidity measure

The cash conversion cycle of YETI Holdings Inc has fluctuated over the past five years. In 2020, the company's cash conversion cycle was relatively efficient at 34.87 days, indicating that it was able to quickly convert its investments in inventory into cash. However, there was a significant increase in the cash conversion cycle in 2021 to 106.59 days, which suggests that it took longer for the company to convert its inventory into receivables and then into cash.

The trend continued in 2022 and 2023, with the cash conversion cycle further increasing to 119.36 days and 95.97 days, respectively. This prolonged cycle indicates potential issues with managing inventory, collecting receivables, or paying off payables efficiently.

In 2024, there was a slight improvement in the cash conversion cycle to 96.14 days, but it still remained elevated compared to previous years. YETI Holdings Inc may need to assess and optimize its working capital management practices to shorten the cash conversion cycle and improve overall liquidity and operational efficiency.