AutoZone Inc (AZO)
Liquidity ratios
| Aug 31, 2024 | May 4, 2024 | Feb 10, 2024 | Nov 18, 2023 | Aug 26, 2023 | May 6, 2023 | Feb 11, 2023 | Nov 19, 2022 | Aug 27, 2022 | May 7, 2022 | Feb 12, 2022 | Nov 20, 2021 | Aug 28, 2021 | May 8, 2021 | Feb 13, 2021 | Nov 21, 2020 | Aug 29, 2020 | May 9, 2020 | Nov 23, 2019 | Aug 31, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.84 | 0.79 | 0.82 | 0.79 | 0.80 | 0.79 | 0.79 | 0.76 | 0.77 | 0.78 | 0.77 | 0.79 | 0.87 | 0.89 | 0.93 | 1.06 | 1.08 | 0.94 | 0.88 | 0.91 |
| Quick ratio | 0.10 | 0.09 | 0.09 | 0.09 | 0.10 | 0.03 | 0.03 | 0.03 | 0.10 | 0.03 | 0.03 | 0.13 | 0.22 | 0.14 | 0.15 | 0.26 | 0.29 | 0.09 | 0.04 | 0.04 |
| Cash ratio | 0.04 | 0.03 | 0.03 | 0.03 | 0.04 | 0.03 | 0.03 | 0.03 | 0.04 | 0.03 | 0.03 | 0.13 | 0.17 | 0.14 | 0.15 | 0.26 | 0.29 | 0.09 | 0.04 | 0.04 |
AutoZone Inc's liquidity ratios, namely the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations with its current assets.
The current ratio shows a declining trend from 0.91 in August 2019 to 0.84 in August 2024. This indicates that AutoZone may be facing challenges in meeting its current liabilities with its current assets over the years. However, the current ratio improved slightly from November 2021 to February 2022 and then again from August 2023 to November 2023, which may suggest some improvement in short-term liquidity during those periods.
The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, also shows a declining trend from 0.29 in August 2019 to 0.10 in August 2024. This indicates that AutoZone's ability to meet its short-term obligations without relying on inventory has weakened over time. However, there were periods of improvement in the quick ratio observed from February 2023 to November 2023 and from February 2021 to August 2021.
The cash ratio, which is the most conservative liquidity measure, shows fluctuations over the years but generally indicates that AutoZone has a very low level of cash compared to its current liabilities. Notably, there was a significant increase in the cash ratio from February 2021 to November 2021, suggesting an improvement in the company's cash position during that period.
Overall, AutoZone Inc's liquidity ratios demonstrate a mixed performance in terms of its ability to meet short-term obligations. The company may need to focus on strengthening its liquidity position to ensure it can cover its current liabilities effectively.
See also:
AutoZone Inc Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Aug 31, 2024 | May 4, 2024 | Feb 10, 2024 | Nov 18, 2023 | Aug 26, 2023 | May 6, 2023 | Feb 11, 2023 | Nov 19, 2022 | Aug 27, 2022 | May 7, 2022 | Feb 12, 2022 | Nov 20, 2021 | Aug 28, 2021 | May 8, 2021 | Feb 13, 2021 | Nov 21, 2020 | Aug 29, 2020 | May 9, 2020 | Nov 23, 2019 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -39.75 | -40.75 | -41.06 | -50.82 | -51.67 | -317.76 | -325.79 | -334.06 | -66.70 | -329.17 | -314.20 | -71.36 | -63.12 | -314.82 | -312.42 | -38.55 | -37.94 | -306.18 | -30.10 | -36.23 |
The cash conversion cycle measures how efficiently a company manages its cash flows related to its operations. It is calculated by adding the days inventory outstanding to the days sales outstanding and then subtracting the days payable outstanding.
Based on the data provided for AutoZone Inc, the cash conversion cycle has varied over the periods. The company has shown negative cash conversion cycle days, indicating that it operates on a cash positive basis. This means that AutoZone is able to collect cash from sales activities before needing to pay its suppliers for inventory.
The cash conversion cycle decreased significantly from May 6, 2023 to Nov 23, 2019, showing a trend of improvement in cash conversion efficiency. This indicates that AutoZone has been able to streamline its operations to convert inventory into cash more quickly and efficiently while managing its payables effectively.
It is important to note the outlier in the data where the cash conversion cycle was significantly negative (e.g., -317.76 days on May 6, 2023). This could be due to specific events or anomalies during that particular period that skewed the calculation.
Overall, the trend of negative cash conversion cycle days for AutoZone Inc reflects a strong cash management strategy, indicating its ability to optimize working capital and liquidity in its operations.