Hormel Foods Corporation (HRL)
Quick ratio
| Oct 29, 2023 | Oct 30, 2022 | Oct 31, 2021 | Oct 25, 2020 | Oct 27, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 736,532 | 982,107 | 613,530 | 1,714,310 | 672,901 |
| Short-term investments | US$ in thousands | 16,664 | 16,149 | 21,162 | 17,338 | 14,736 |
| Receivables | US$ in thousands | 824,633 | 874,770 | 904,012 | 743,868 | 594,320 |
| Total current liabilities | US$ in thousands | 2,311,780 | 1,473,270 | 1,415,650 | 1,503,960 | 1,105,050 |
| Quick ratio | 0.68 | 1.27 | 1.09 | 1.65 | 1.16 |
October 29, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($736,532K
+ $16,664K
+ $824,633K)
÷ $2,311,780K
= 0.68
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing quick assets (current assets excluding inventory) by current liabilities.
Hormel Foods Corp.'s quick ratio has fluctuated over the past five years, indicating varying levels of liquidity. In 2023, the quick ratio stands at 0.70, reflecting a significant decrease from the previous year. This suggests a potential difficulty in meeting short-term obligations, as the company's quick assets may not be adequate to cover its current liabilities. The decrease in the quick ratio may be indicative of a decline in the liquidity of Hormel Foods Corp.
In 2022, the quick ratio was 1.30, indicating that the company had $1.30 in quick assets to cover each dollar of current liabilities. This suggested a comfortable level of liquidity, signaling the company's ability to meet its short-term obligations.
In 2021, the quick ratio was 1.12, showing a slight decrease from the previous year. Although still above 1, the quick ratio declined, indicating a potential reduction in liquidity compared to the prior period.
In 2020, Hormel Foods Corp. exhibited a quick ratio of 1.67, signifying an increase in liquidity compared to 2019. The higher quick ratio suggested improved ability to cover short-term liabilities with quick assets.
In 2019, the quick ratio was 1.19, indicating a lower level of liquidity compared to the following years.
Overall, the fluctuation in Hormel Foods Corp.'s quick ratio over the past five years suggests varying levels of liquidity, which can impact the company's ability to meet its short-term obligations. The declining trend in recent years may warrant further investigation into the company's liquidity management.