Best Buy Co. Inc (BBY)
Quick ratio
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 1,578,000 | 1,447,000 | 1,874,000 | 2,936,000 | 5,494,000 |
| Short-term investments | US$ in thousands | — | — | 178,000 | — | 65,000 |
| Receivables | US$ in thousands | 1,044,000 | 939,000 | 1,141,000 | 1,042,000 | 1,061,000 |
| Total current liabilities | US$ in thousands | 8,016,000 | 7,909,000 | 8,979,000 | 10,674,000 | 10,521,000 |
| Quick ratio | 0.33 | 0.30 | 0.36 | 0.37 | 0.63 |
February 1, 2025 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($1,578,000K
+ $—K
+ $1,044,000K)
÷ $8,016,000K
= 0.33
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. Looking at the quick ratio trend of Best Buy Co. Inc from January 30, 2021, to February 1, 2025, we observe a gradual decline. The quick ratio decreased from 0.63 in January 30, 2021, to 0.33 in February 1, 2025, indicating a decrease in the company's ability to cover its short-term liabilities with its current liquid assets.
A quick ratio below 1 suggests that the company may have difficulty meeting its short-term obligations without selling inventory. In the case of Best Buy Co. Inc, the decreasing trend in the quick ratio raises concerns about its liquidity position and ability to manage short-term financial obligations effectively. Further investigation into the company's current asset composition and management of its current liabilities may be necessary to address this declining trend in the quick ratio.