Clear Secure Inc (YOU)

Clear Secure Inc's liquidity position has shown variability over the past five years based on the provided ratios.

1. Current Ratio: This ratio indicates the company's ability to meet its short-term obligations with its current assets. Clear Secure Inc's current ratio has fluctuated over the years, ranging from a low of 1.03 to a high of 2.47. While a ratio above 1 indicates the company has more current assets than current liabilities, the decreasing trend from 2021 to 2024 may raise some concerns about the firm's ability to cover its short-term debts adequately.

2. Quick Ratio: The quick ratio provides a more stringent measure of liquidity by excluding inventory from current assets. Clear Secure Inc's quick ratio has also exhibited fluctuations, with values ranging from 0.95 to 2.33. Similar to the current ratio, the quick ratio shows a decreasing trend from 2021 to 2024, suggesting a reduced ability to meet short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio specifically focuses on the company's ability to cover its current liabilities with its cash and cash equivalents. Clear Secure Inc's cash ratio mirrors the trends seen in the current and quick ratios, showing a decrease from 2021 to 2024. The cash ratio values range from 0.95 to 2.33, indicating that the company may have relied less on cash to meet its short-term obligations in 2024 compared to previous years.

Overall, while Clear Secure Inc has maintained liquidity ratios above 1 over the years, the decreasing trend in these ratios from 2021 to 2024 raises some concerns about the company's ability to meet short-term financial obligations without relying on inventory or cash as much as in previous years. Management may need to closely monitor liquidity going forward to ensure the firm remains financially stable.

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Additional liquidity measure

The cash conversion cycle of Clear Secure Inc has shown a fluctuating trend over the past five years.

- In December 2020, the cash conversion cycle was 64.44 days, indicating that on average, it took the company 64.44 days to convert its investments in inventory and other resources into cash.
- By December 2021, the cash conversion cycle increased to 67.83 days, suggesting a slight delay in the company's ability to convert its assets into cash.
- In December 2022, the cash conversion cycle extended further to 69.26 days, indicating a potential inefficiency in managing the cash flow cycle.
- However, by December 2023, there was a notable improvement as the cash conversion cycle decreased to 59.38 days, implying that the company was able to more efficiently convert its resources into cash.
- Interestingly, in December 2024, the cash conversion cycle was reported as 0.00 days. It is important to note that a zero-day cash conversion cycle may not be feasible or realistic, as it suggests that the company is able to convert its investments into cash instantly, which is uncommon in practice.

Overall, the trend in Clear Secure Inc's cash conversion cycle reflects fluctuations in the company's efficiency in managing its operations, inventory, and accounts receivable to generate cash flow. It is essential for the company to monitor and optimize its cash conversion cycle to maintain a healthy and sustainable financial position.