AutoZone Inc (AZO)

Quick ratio

		Aug 31, 2024	Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020
Cash	US$ in thousands	298,172	277,054	264,380	1,171,340	1,750,820
Short-term investments	US$ in thousands	38,431	39,639	49,768	46,007	76,118
Receivables	US$ in thousands	545,575	520,385	504,886	378,392	364,774
Total current liabilities	US$ in thousands	8,714,240	8,511,860	8,588,390	7,369,750	6,283,090
Quick ratio		0.10	0.10	0.10	0.22	0.35

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.