Fastenal Company (FAST)
Current ratio
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 3,020,900 | 3,124,800 | 2,856,600 | 2,499,600 | 2,457,200 |
| Total current liabilities | US$ in thousands | 661,300 | 789,800 | 682,200 | 612,700 | 544,700 |
| Current ratio | 4.57 | 3.96 | 4.19 | 4.08 | 4.51 |
December 31, 2023 calculation
Current ratio = Total current assets ÷ Total current liabilities
= $3,020,900K ÷ $661,300K
= 4.57
The current ratio of Fastenal Co. has exhibited variability over the past five years, ranging from 3.96 to 4.57. A higher current ratio indicates that the company has a stronger ability to cover its short-term obligations with its current assets. Fastenal Co. consistently maintained a current ratio above 4 in the last five years, reflecting a healthy liquidity position and a sufficient buffer to meet its current liabilities.
The current ratio peaked at 4.57 in the most recent year, which suggests an improvement in the company's liquidity position compared to the previous year. This can be seen as a positive sign, indicating that Fastenal Co. has increased its ability to meet its short-term obligations using its current assets.
However, it's essential to consider the industry benchmarks and the company's specific circumstances when interpreting the current ratio. A very high current ratio may indicate inefficient use of resources, like excess cash or inventory, which could impact profitability. On the other hand, a very low current ratio may suggest liquidity issues and the potential inability to meet short-term obligations.
Overall, the trend of Fastenal Co.'s current ratio indicates a consistent and stable liquidity position over the past five years, with the recent increase suggesting an enhanced ability to cover short-term liabilities with current assets.
Peer comparison
Dec 31, 2023