Costco Wholesale Corp (COST)

The current ratio of Costco Wholesale Corp has been fluctuating over the past five years, ranging from 0.97 to 1.13. This ratio indicates the company's ability to meet its short-term obligations with its current assets. A current ratio below 1 suggests potential liquidity issues, as assets may not be sufficient to cover liabilities.

The quick ratio, which excludes inventory from current assets, has also shown variability, ranging from 0.39 to 0.60. This ratio provides a more stringent measure of liquidity, as it reflects the company's ability to pay off immediate liabilities without relying on selling inventory. A quick ratio below 1 may indicate potential difficulties in meeting short-term obligations quickly.

The cash ratio, which is the most conservative liquidity measure, has likewise fluctuated for Costco Wholesale Corp over the past five years, with values ranging from 0.31 to 0.54. This ratio focuses solely on the company's ability to cover current liabilities with its cash and cash equivalents. A cash ratio below 1 suggests that the company may not have enough liquid assets to meet its short-term obligations outright.

Overall, Costco Wholesale Corp's liquidity ratios show some variability but generally indicate that the company has faced challenges in maintaining optimal levels of liquidity to cover its short-term obligations consistently over the past five years. It is important for investors and stakeholders to monitor these ratios closely to assess the company's ability to manage its short-term financial commitments effectively.

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See also:

Costco Wholesale Corp Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Costco Wholesale Corp has shown fluctuations over the past five years. In September 2024, the company's cash conversion cycle was 2.75 days, indicating that it takes approximately 2.75 days for Costco to convert its investments in inventory and other resources into cash from sales. This was an increase from the previous year, where the cycle stood at 2.15 days.

In August 2022, the cash conversion cycle of 3.70 days was higher compared to the preceding year, showing that Costco took longer to convert its investments into cash. Interestingly, in August 2021, the cycle was negative at -0.62 days, implying that Costco was able to convert its investments into cash before paying for resources, resulting in a negative cycle which is a favorable scenario.

Similarly, in August 2020, the company also had a negative cash conversion cycle of -0.97 days, suggesting efficient management of its working capital. Overall, despite some fluctuations, Costco has generally maintained a relatively efficient cash conversion cycle over the past five years, with occasional improvements and adjustments in operational efficiency.