AutoZone Inc (AZO)
Quick ratio
| Aug 31, 2024 | Aug 31, 2023 | Aug 26, 2023 | Aug 31, 2022 | Aug 27, 2022 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 298,172 | 277,054 | 277,054 | 264,380 | 264,380 |
| Short-term investments | US$ in thousands | 38,431 | 39,639 | 39,639 | 49,768 | 49,768 |
| Receivables | US$ in thousands | 545,575 | 520,385 | 520,385 | 504,886 | 504,886 |
| Total current liabilities | US$ in thousands | 8,714,240 | 8,511,860 | 8,511,860 | 8,588,390 | 8,588,390 |
| Quick ratio | 0.10 | 0.10 | 0.10 | 0.10 | 0.10 |
August 31, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($298,172K
+ $38,431K
+ $545,575K)
÷ $8,714,240K
= 0.10
The quick ratio of AutoZone Inc has been consistently low over the past five years, indicating a concerning liquidity position. The quick ratio, which measures the company's ability to meet its short-term obligations with its most liquid assets, has remained stagnant at around 0.10 since 2020. This suggests that AutoZone may have difficulty covering its current liabilities with its highly liquid assets such as cash and marketable securities.
A quick ratio of 0.10 implies that for every dollar of current liabilities, AutoZone only has 10 cents of quick assets available to meet those obligations. This raises concerns about the company's short-term financial health and its ability to manage its working capital effectively.
The significant decline in the quick ratio from 0.35 in 2020 to 0.10 in 2022 indicates a deterioration in AutoZone's liquidity position. Investors and creditors may view this trend unfavorably as it could signal potential cash flow challenges or an inefficient use of resources within the company.
Overall, based on the quick ratio trend observed, AutoZone Inc may need to focus on improving its liquidity position and managing its current assets more efficiently to ensure its ability to meet short-term obligations in the future.