CarMax Inc (KMX)

Quick ratio

		Feb 29, 2024	Feb 28, 2023	Feb 28, 2022	Feb 28, 2021	Feb 29, 2020
Cash	US$ in thousands	574,142	314,758	102,716	132,319	58,211
Short-term investments	US$ in thousands	—	—	—	—	—
Receivables	US$ in thousands	16,666,400	16,229,200	15,583,300	13,693,800	191,090
Total current liabilities	US$ in thousands	2,312,290	1,938,310	2,047,460	1,698,550	1,534,710
Quick ratio		7.46	8.54	7.66	8.14	0.16

February 29, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($574,142K + $—K + $16,666,400K) ÷ $2,312,290K
= 7.46

The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations with its most liquid assets. A higher quick ratio indicates better liquidity and financial health.

CarMax Inc's quick ratio has shown a fluctuating trend over the past five years. The quick ratio was significantly high in 2023 at 8.54, indicating that the company had a strong ability to cover its short-term liabilities with its liquid assets. This was followed by a slight decrease in 2024 to 7.46, which is still considered a healthy level.

In contrast, there was a notable improvement in the quick ratio from 2020 to 2021, where it increased from a very low 0.16 to 8.14. This substantial increase suggests a significant enhancement in the company's liquidity position over the year.

Overall, CarMax Inc's quick ratio has generally been above 1, reflecting a comfortable liquidity position over the years analyzed. However, it is essential to assess the company's quick ratio in conjunction with other financial metrics to gain a comprehensive understanding of its financial health and liquidity management.