Aramark Holdings (ARMK)
Liquidity ratios
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 0.81 | 1.04 | 1.00 | 1.01 | 1.99 |
| Quick ratio | 0.67 | 0.78 | 0.78 | 0.80 | 1.68 |
| Cash ratio | 0.17 | 0.39 | 0.12 | 0.19 | 1.07 |
Aramark Holdings' liquidity ratios have exhibited a downward trend over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, decreased from 1.99 in 2020 to 0.81 in 2024. This declining trend indicates a potential weakening in the company's short-term liquidity position.
Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also decreased over the same period, from 1.68 in 2020 to 0.67 in 2024. This indicates a decrease in the company's ability to meet its short-term obligations with its most liquid assets.
The cash ratio, which measures the proportion of cash and cash equivalents to cover current liabilities, also experienced a significant decrease from 1.07 in 2020 to 0.17 in 2024. This suggests a considerable decrease in Aramark Holdings' ability to pay off its short-term obligations using cash on hand.
Overall, the declining trend in Aramark Holdings' liquidity ratios over the past five years raises concerns about the company's ability to meet its short-term financial obligations and may indicate potential liquidity challenges. Further analysis and monitoring of the company's liquidity position and cash management practices may be warranted to address these concerns.
Additional liquidity measure
| Sep 30, 2024 | Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 22.09 | 19.92 | 30.81 | 38.02 | 35.49 |
The cash conversion cycle of Aramark Holdings has fluctuated over the past five years. In 2024, it decreased to 22.09 days from 19.92 days in 2023. This indicates that the company took slightly longer to convert its investments in inventory and accounts receivable into cash in 2024 compared to the previous year.
In 2022, the cash conversion cycle was at its highest level of 30.81 days, indicating a longer period to convert investments into cash compared to the prior years. This was followed by a decrease to 38.02 days in 2021, which suggests an improvement in efficiency in managing inventory and receivables.
The trend continued in 2020 with a further decrease to 35.49 days, implying a better cash conversion performance. Overall, fluctuations in the cash conversion cycle over the years may suggest changes in the company's working capital management and operational efficiency.