Cintas Corporation (CTAS)
Liquidity ratios
| Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.72 | 1.58 | 1.53 | 1.12 | 1.50 | 2.24 | 2.56 | 2.39 | 2.10 | 1.86 | 1.72 | 1.84 | 1.02 | 1.22 | 1.09 | 1.47 | 2.34 | 2.06 | 2.44 | 2.61 |
| Quick ratio | 0.85 | 0.74 | 0.70 | 0.87 | 1.09 | 1.00 | 1.10 | 1.04 | 0.88 | 0.80 | 0.72 | 0.78 | 0.44 | 0.54 | 0.58 | 0.87 | 1.42 | 1.27 | 1.40 | 1.15 |
| Cash ratio | 0.13 | 0.06 | 0.05 | 0.19 | 0.10 | 0.06 | 0.08 | 0.10 | 0.06 | 0.06 | 0.05 | 0.06 | 0.03 | 0.05 | 0.17 | 0.40 | 0.64 | 0.63 | 0.61 | 0.16 |
The liquidity ratios of Cintas Corporation over the specified period exhibit notable fluctuations that reflect changes in its short-term financial health and liquidity position.
Starting with the current ratio, which measures the company’s ability to meet its short-term obligations with its current assets, there was a trend of decline from May 2020 to February 2022. Specifically, the ratio decreased from 2.61 in May 2020 to a low of 1.02 in February 2022, indicating a weakening liquidity position as the company’s current assets relative to current liabilities diminished during this period. However, from May 2022 onwards, the current ratio shows an upward trend, reaching a peak of 2.56 in August 2023 before experiencing a slight decline to 1.50 by February 2024. This suggests a partial recovery and strengthening of liquidity in the later period but with some volatility.
The quick ratio, which excludes inventory from current assets and therefore provides a more conservative view of liquidity, followed a similar downward trend from 1.15 in May 2020 to a nadir of 0.44 in February 2022. This indicates that by early 2022, the company had less readily available assets to cover current liabilities, raising concerns over immediate liquidity. From that point, the quick ratio recovered modestly, reaching 1.10 by August 2023, signaling improved liquidity and the availability of more liquid assets to cover short-term obligations. Nonetheless, fluctuations persisted, with the ratio settling at around 0.85 to 1.00 in the most recent periods.
The cash ratio, representing the most conservative liquidity measure focusing solely on cash and cash equivalents, remained relatively low throughout the analyzed periods. It experienced notable variation, starting at 0.16 in May 2020, increasing temporarily to 0.61 in August 2020, and peaking at 0.63 in November 2020. Subsequently, it generally declined, reaching lows of 0.03 in February 2022. More recently, the cash ratio showed slight recovery, reaching 0.13 in February 2025, but it remained significantly below 1.0, indicating that the firm’s most liquid assets constitute a small proportion of current liabilities.
In summary, Cintas’s liquidity ratios depict a period of weakening liquidity from mid-2020 to early 2022, followed by a recovery phase beginning in 2022 through 2023, with ratios improving but remaining somewhat volatile. The differences among the three ratios suggest that while the company’s overall ability to meet current obligations has improved, reliance on less liquid assets persists, and liquidity remains relatively tight on a cash basis.
See also:
Additional liquidity measure
| Feb 28, 2025 | Nov 30, 2024 | Aug 31, 2024 | May 31, 2024 | Feb 29, 2024 | Nov 30, 2023 | Aug 31, 2023 | May 31, 2023 | Feb 28, 2023 | Nov 30, 2022 | Aug 31, 2022 | May 31, 2022 | Feb 28, 2022 | Nov 30, 2021 | Aug 31, 2021 | May 31, 2021 | Feb 28, 2021 | Nov 30, 2020 | Aug 31, 2020 | May 31, 2020 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 51.20 | 48.63 | 48.63 | 52.51 | 59.65 | 141.59 | 142.10 | 143.36 | 147.80 | 147.03 | 143.55 | 146.09 | 152.95 | 153.33 | 151.44 | 149.27 | 157.01 | 151.31 | 140.09 | 134.71 |
The analysis of Cintas Corporation's cash conversion cycle (CCC) over the provided periods reveals notable long-term trends and recent developments. Historically, the CCC ranged from approximately 134.71 days on May 31, 2020, reaching a peak of around 157.01 days on February 28, 2021. During this period, the company experienced extended cycles indicating slower inventory turnover, longer receivables collection periods, or prolonged payment terms to suppliers.
Between mid-2020 and early 2023, the CCC fluctuated within a relatively narrow band, generally maintaining between approximately 140 and 154 days. Notably, there was a slight reduction in the cycle around May 2023 (143.36 days) and August 2023 (142.10 days), suggesting modest improvements in working capital efficiency.
However, a significant shift occurred in the most recent data points. As of February 29, 2024, the CCC sharply decreased to 59.65 days, and this decline continued into May 2024 and August 2024 where the cycle stabilized around 48.63 to 52.51 days. These recent figures represent a substantial reduction relative to historical levels, indicating a much more efficient working capital management. The marked decrease suggests that Cintas has shortened its inventory holding periods, accelerated receivables collections, or optimized its payables strategy, or a combination thereof.
In summary, Cintas Corporation's cash conversion cycle experienced a long-term period of relative stability with some fluctuations from 2020 through early 2023. The recent dramatic decline indicates an improved operational performance and a more effective working capital cycle, positioning the company towards a shorter and potentially more efficient cash conversion process.