Costco Wholesale Corp (COST)
Quick ratio
| Sep 1, 2024 | Sep 3, 2023 | Aug 28, 2022 | Aug 29, 2021 | Aug 30, 2020 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 9,906,000 | 13,700,000 | 10,203,000 | 11,258,000 | 12,277,000 |
| Short-term investments | US$ in thousands | 1,238,000 | 1,534,000 | 846,000 | 917,000 | 1,028,000 |
| Receivables | US$ in thousands | 2,721,000 | 2,285,000 | 2,241,000 | 1,803,000 | 1,550,000 |
| Total current liabilities | US$ in thousands | 35,464,000 | 33,583,000 | 31,998,000 | 29,441,000 | 24,844,000 |
| Quick ratio | 0.39 | 0.52 | 0.42 | 0.47 | 0.60 |
September 1, 2024 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($9,906,000K
+ $1,238,000K
+ $2,721,000K)
÷ $35,464,000K
= 0.39
The quick ratio of Costco Wholesale Corp has shown a declining trend over the past five years, suggesting a potential decrease in the company's liquidity and ability to meet its short-term obligations with its most liquid assets.
The quick ratio was at its highest in 2020 at 0.60, indicating that Costco had a higher level of liquid assets relative to its current liabilities that year. However, since then, the quick ratio has steadily decreased to 0.39 in 2024. This downward trend may raise concerns about the company's short-term financial health and its ability to quickly cover its obligations.
A quick ratio below 1.0 typically indicates that a company may have difficulty meeting its short-term obligations using only its most liquid assets such as cash and marketable securities. As Costco's quick ratio has consistently been below 1.0 in the past five years, it suggests that the company may rely more heavily on other sources of liquidity, such as inventory or accounts receivable, to meet its short-term obligations.
Investors and creditors may monitor Costco's quick ratio closely to assess its liquidity position and evaluate the company's ability to manage its short-term financial obligations effectively. The declining trend in the quick ratio over the years may prompt stakeholders to further investigate Costco's liquidity management strategies and financial performance to ensure the company remains financially sound in the foreseeable future.
Peer comparison
Sep 1, 2024