Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
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- Cash Flow Statement
- Common-Size Balance Sheet: Liabilities and Stockholders’ Equity
- Capital Asset Pricing Model (CAPM)
- Present Value of Free Cash Flow to Equity (FCFE)
- Selected Financial Data since 2005
- Return on Equity (ROE) since 2005
- Total Asset Turnover since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Aggregate Accruals
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Liquidity Ratios (Summary)
Builders FirstSource Inc., liquidity ratios
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Current ratio | ||||||
| Quick ratio | ||||||
| Cash ratio |
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
- Current Ratio
- The current ratio exhibits some variability over the analyzed periods, beginning at 1.88 in 2018, declining to 1.59 in 2019, then rising to a peak of 2.07 in 2020 before slightly decreasing to 1.86 in 2021 and marginally increasing again to 1.9 in 2022. This indicates a fluctuating but generally stable ability to cover short-term liabilities with current assets, maintaining a level comfortably above 1.5 in most years.
- Quick Ratio
- The quick ratio follows a pattern similar to the current ratio but with relatively lower values, reflecting the exclusion of inventories from liquid assets. It starts at 1.00 in 2018 and decreases to 0.86 in 2019, then increases substantially to 1.28 in 2020. This is followed by a decline to 1.04 in 2021 and a slight increase to 1.06 in 2022. These movements suggest some fluctuations in the more liquid asset base relative to current liabilities, with a notable improvement in 2020 but a slight weakening afterwards.
- Cash Ratio
- The cash ratio remains consistently low throughout the period, starting at 0.01 in 2018, with a slight rise to 0.02 in 2019. It then sees a significant increase to 0.39 in 2020 but falls back sharply to 0.02 in 2021, followed by a modest increase to 0.04 in 2022. This low cash coverage relative to current liabilities indicates limited cash and cash equivalents on hand, except for the temporary spike in 2020, which might reflect strategic cash accumulation or one-time liquidity measures during that year.
Current Ratio
Builders FirstSource Inc., current ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Current assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Current ratio1 | ||||||
| Benchmarks | ||||||
| Current Ratio, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Current Ratio, Sector | ||||||
| Capital Goods | ||||||
| Current Ratio, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Current Assets
- The current assets demonstrate a marked upward trend from 2018 through 2021, increasing from approximately 1.37 billion US dollars to nearly 3.97 billion US dollars. This substantial growth indicates an expansion in assets readily convertible to cash or used in operations within one year. However, there is a noticeable decline in 2022, with current assets decreasing to approximately 3.50 billion US dollars, which may suggest a strategic reduction in liquid assets or changes in operational requirements.
- Current Liabilities
- The current liabilities have shown a continuous increase over the five-year period, rising steadily from about 731 million US dollars in 2018 to approximately 2.13 billion US dollars in 2021. This increase suggests higher short-term obligations, potentially linked to the company's growth or changes in credit policies. In 2022, current liabilities decreased slightly to around 1.84 billion US dollars, indicating a possible effort to reduce short-term debt or improved cash management.
- Current Ratio
- The current ratio fluctuated over the years without a consistent upward or downward trajectory. Starting at 1.88 in 2018, it declined to 1.59 in 2019, pointing to reduced liquidity or higher short-term obligations relative to assets. The ratio rebounded to 2.07 in 2020, suggesting improved short-term financial health. Thereafter, it decreased to 1.86 in 2021 and slightly increased to 1.90 in 2022. Overall, the current ratio remained above 1.5 throughout, indicating the company consistently maintained a buffer of current assets over current liabilities, reflective of stable short-term financial stability.
Quick Ratio
Builders FirstSource Inc., quick ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Accounts receivable, less allowances | ||||||
| Other receivables | ||||||
| Contract assets | ||||||
| Total quick assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Quick ratio1 | ||||||
| Benchmarks | ||||||
| Quick Ratio, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Quick Ratio, Sector | ||||||
| Capital Goods | ||||||
| Quick Ratio, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total quick assets
- The total quick assets increased significantly over the period under review. Starting at approximately 733 million US dollars in 2018, the figure saw a notable rise to about 1.38 billion in 2020, reaching a peak of over 2.21 billion in 2021 before slightly declining to roughly 1.95 billion in 2022. This pattern indicates strong growth in liquid assets, albeit with a minor retreat in the last year.
- Current liabilities
- Current liabilities exhibited a steady upward trajectory from 731 million US dollars in 2018 to over 2.13 billion in 2021. In 2022, these liabilities decreased somewhat to approximately 1.84 billion. Despite the recent reduction, the overall long-term trend highlights increasing short-term obligations, which warrants attention regarding the company's liquidity management.
- Quick ratio
- The quick ratio fluctuated during the period, initially dropping from 1.00 in 2018 to 0.86 in 2019, suggesting reduced short-term liquidity relative to current liabilities. It then improved notably to 1.28 in 2020, reflecting enhanced ability to cover current liabilities with quick assets. Subsequent years saw a decline to 1.04 in 2021, with a slight increase to 1.06 in 2022. Overall, the ratio remained close to 1 but exhibited some volatility, signifying varying degrees of liquidity over time.
Cash Ratio
Builders FirstSource Inc., cash ratio calculation, comparison to benchmarks
| Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Cash and cash equivalents | ||||||
| Total cash assets | ||||||
| Current liabilities | ||||||
| Liquidity Ratio | ||||||
| Cash ratio1 | ||||||
| Benchmarks | ||||||
| Cash Ratio, Competitors2 | ||||||
| Boeing Co. | ||||||
| Caterpillar Inc. | ||||||
| Eaton Corp. plc | ||||||
| GE Aerospace | ||||||
| Honeywell International Inc. | ||||||
| Lockheed Martin Corp. | ||||||
| RTX Corp. | ||||||
| Cash Ratio, Sector | ||||||
| Capital Goods | ||||||
| Cash Ratio, Industry | ||||||
| Industrials | ||||||
Based on: 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31).
1 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= ÷ =
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets exhibited significant volatility during the period under review. Starting at 10,127 thousand US dollars at the end of 2018, there was a moderate increase to 14,096 thousand in 2019. A sharp and substantial rise occurred in 2020, with cash assets reaching 423,806 thousand. However, this peak was followed by a steep decline to 42,603 thousand in 2021. The figure then recovered to 80,445 thousand at the end of 2022, representing an improvement but remaining well below the 2020 level.
- Current Liabilities
- Current liabilities showed a consistent upward trend over the analyzed years. The value increased steadily from 731,259 thousand US dollars in 2018 to 821,301 thousand in 2019, followed by a more pronounced growth to 1,074,853 thousand in 2020. The upward trajectory continued sharply in 2021, with liabilities nearly doubling to 2,128,711 thousand. In 2022, current liabilities decreased to 1,842,779 thousand but still remained significantly elevated compared to earlier years.
- Cash Ratio
- The cash ratio, which measures liquidity by comparing cash assets to current liabilities, mirrored the trends in cash and liabilities. It remained very low and relatively stable from 2018 through 2019, at 0.01 and 0.02 respectively. There was a dramatic increase to 0.39 in 2020, reflecting the spike in cash assets relative to liabilities. However, the ratio dropped back sharply to 0.02 in 2021 and experienced a slight recovery to 0.04 in 2022, indicating continued limited liquidity relative to current obligations.
- Overall Assessment
- The data reveals significant fluctuations in liquidity and cash management during the period. The peak in cash assets in 2020 coincided with an increased cash ratio, suggesting unusually strong liquidity. However, the subsequent decline in cash assets alongside sustained high current liabilities led to a weakening of the cash ratio, highlighting potential liquidity pressures in 2021 and 2022. The persistent rise in current liabilities, especially the rapid escalation in 2021, indicates increasing short-term obligations that may warrant careful monitoring in conjunction with cash resource management strategies.