AutoZone Inc (AZO)
Liquidity ratios
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | |
|---|---|---|---|---|---|
| Current ratio | 0.80 | 0.77 | 0.87 | 1.08 | 0.91 |
| Quick ratio | 0.10 | 0.10 | 0.22 | 0.35 | 0.10 |
| Cash ratio | 0.04 | 0.04 | 0.17 | 0.29 | 0.04 |
Based on the liquidity ratios for Autozone Inc., there are some concerning trends. The current ratio, which measures the company's ability to meet short-term obligations, has decreased over the past five years, indicating a potential strain on liquidity. The quick ratio, a more stringent measure of liquidity excluding inventory, has also remained consistently low, suggesting a dependency on inventory for liquidity. Furthermore, the cash ratio, which reveals the proportion of immediate cash to current liabilities, has fluctuated and trended downwards, indicating potential difficulties in meeting immediate obligations with cash on hand. These declining liquidity ratios may raise concerns about Autozone Inc.'s ability to efficiently manage short-term financial needs.
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Additional liquidity measure
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -51.67 | -66.70 | -63.12 | -32.00 | -26.72 |
The cash conversion cycle of Autozone Inc. has shown a fluctuating trend over the past five years, indicating the company's efficiency in managing its cash, inventory, and receivables. The negative values imply that Autozone has been able to convert its inventory and accounts receivable into cash at a faster rate than paying its suppliers, which is generally a positive sign. However, the cycle has fluctuated, with the lowest value of -66.70 in 2022 and the highest value of -26.72 in 2019. This fluctuation suggests changes in the company's working capital management or operating efficiency over the years. It would be important to further investigate the reasons behind these fluctuations and their potential impact on the company's financial performance and liquidity management.