Costco Wholesale Corp (COST)
Liquidity ratios
| Feb 18, 2024 | Nov 26, 2023 | Sep 3, 2023 | May 7, 2023 | Feb 12, 2023 | Nov 20, 2022 | Aug 28, 2022 | May 8, 2022 | Feb 13, 2022 | Nov 21, 2021 | Aug 29, 2021 | May 9, 2021 | Feb 14, 2021 | Nov 22, 2020 | Aug 30, 2020 | May 10, 2020 | Feb 16, 2020 | Nov 24, 2019 | Sep 1, 2019 | May 12, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 0.93 | 1.09 | 1.07 | 1.08 | 1.06 | 1.03 | 1.02 | 1.04 | 1.03 | 1.02 | 1.00 | 1.00 | 0.99 | 0.98 | 1.13 | 1.11 | 1.04 | 1.01 | 1.01 | 0.98 |
| Quick ratio | 0.38 | 0.55 | 0.52 | 0.51 | 0.50 | 0.42 | 0.42 | 0.43 | 0.46 | 0.46 | 0.47 | 0.45 | 0.42 | 0.49 | 0.60 | 0.58 | 0.47 | 0.45 | 0.47 | 0.43 |
| Cash ratio | 0.30 | 0.49 | 0.45 | 0.43 | 0.42 | 0.35 | 0.35 | 0.37 | 0.39 | 0.40 | 0.41 | 0.40 | 0.35 | 0.44 | 0.54 | 0.52 | 0.38 | 0.38 | 0.41 | 0.36 |
Costco Wholesale Corp's liquidity ratios exhibit some fluctuations over the past few quarters. The current ratio, which measures the company's ability to cover its short-term obligations with current assets, has shown a decreasing trend from 1.13 in August 2020 to 0.93 in February 2024. This indicates a potential decrease in the company's ability to meet its short-term liabilities with its current assets.
Similarly, the quick ratio, which provides a more stringent view of liquidity by excluding inventories from current assets, has also declined over the period from 0.60 in August 2020 to 0.38 in February 2024. This suggests that Costco's ability to meet its immediate obligations without relying on inventory has weakened.
The cash ratio, representing the most conservative measure of liquidity, has shown a downward trend from 0.54 in August 2020 to 0.30 in February 2024. This indicates that Costco's ability to cover its short-term liabilities solely with cash and cash equivalents has decreased.
Overall, the declining trend in Costco Wholesale Corp's liquidity ratios highlights a potential concern regarding its ability to meet short-term obligations. Further analysis and monitoring of the company's liquidity position may be necessary to assess any underlying issues and ensure financial stability in the short term.
See also:
Costco Wholesale Corp Liquidity Ratios (Quarterly Data)
Additional liquidity measure
| Feb 18, 2024 | Nov 26, 2023 | Sep 3, 2023 | May 7, 2023 | Feb 12, 2023 | Nov 20, 2022 | Aug 28, 2022 | May 8, 2022 | Feb 13, 2022 | Nov 21, 2021 | Aug 29, 2021 | May 9, 2021 | Feb 14, 2021 | Nov 22, 2020 | Aug 30, 2020 | May 10, 2020 | Feb 16, 2020 | Nov 24, 2019 | Sep 1, 2019 | May 12, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 3.23 | -3.10 | 0.95 | 2.30 | 3.54 | 4.02 | 3.70 | 3.27 | 2.33 | -3.56 | -2.48 | -0.05 | 2.86 | -1.14 | -0.97 | 3.89 | 6.51 | 2.43 | 2.91 | 4.09 |
The cash conversion cycle of Costco Wholesale Corp has fluctuated over the analyzed period, indicating variability in the company's efficiency in managing its working capital. The cycle measures the time taken for Costco to convert its investments in inventory and other resources into cash inflows. A positive cash conversion cycle indicates that Costco takes longer to collect cash from sales than it takes to pay its obligations, which can strain liquidity.
In some periods, such as Feb 18, 2024, Feb 12, 2023, and May 10, 2020, the company had a positive cash conversion cycle, implying that Costco took more time to convert its investments into cash flow. This could be due to delays in collecting receivables or managing inventory levels effectively.
Conversely, a negative cash conversion cycle, as seen in Nov 26, 2023, Sep 3, 2023, and Nov 21, 2021, indicates that Costco was able to collect cash from its sales and pay its obligations more quickly than it took to replenish its inventory. This situation can be beneficial as it signifies efficient working capital management and potentially lower financing needs.
Overall, monitoring the cash conversion cycle provides insights into Costco's operational efficiency, working capital management, and potential liquidity challenges or opportunities. consistent improvements in reducing the cycle duration may indicate enhanced efficiency and financial health for the company.