Performance Food Group Co (PFGC)

Performance Food Group Co's liquidity ratios provide insight into its ability to meet short-term obligations and cover immediate financial needs.

1. Current Ratio: This ratio indicates the company's ability to pay off its current liabilities with its current assets. Over the past five years, Performance Food Group Co's current ratio has shown a generally increasing trend, from 1.57 in 2019 to 1.71 in 2023. The current ratio above 1 suggests that the company has sufficient current assets to cover its current liabilities, indicating a healthy liquidity position.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, measures the company's ability to pay off current liabilities without relying on the sale of inventory. Performance Food Group Co's quick ratio has fluctuated slightly over the past five years, ranging from 0.65 in 2021 and 2022 to 0.73 in 2019. A quick ratio below 1 may indicate that the company may have difficulty meeting its short-term obligations without relying on inventory sales.

3. Cash Ratio: The cash ratio measures the company's ability to cover its current liabilities with its cash and cash equivalents. Performance Food Group Co's cash ratio has been consistently low over the past five years, hovering around 0.01 except for 2020 when it briefly rose to 0.16. A low cash ratio suggests that the company relies more on other current assets rather than cash to meet its short-term obligations.

In summary, Performance Food Group Co's liquidity ratios generally indicate a healthy liquidity position over the years, with the current ratio consistently above 1. However, the low cash ratio and fluctuating quick ratio warrant further monitoring to ensure the company's ability to meet short-term obligations without relying heavily on inventory sales or non-cash assets.

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Additional liquidity measure

The cash conversion cycle (CCC) measures how efficiently a company manages its working capital by analyzing how long it takes for the company to convert its resources into cash flow. A shorter CCC indicates better liquidity and efficiency in managing cash flow.

Performance Food Group Co's cash conversion cycle has fluctuated over the past five years. In 2023, the CCC decreased to 39.67 days from 44.05 days in 2022. This reduction indicates that the company is improving its efficiency in managing working capital and converting it into cash.

Comparing it to previous years, the 2023 CCC is still lower than the 2021 and 2022 levels but higher than the 2019 and 2020 levels. This suggests that Performance Food Group Co may have made operational adjustments to streamline its cash conversion process more effectively in 2023.

Overall, a decreasing trend in the cash conversion cycle demonstrates that Performance Food Group Co has been managing its working capital more efficiently, turning inventory into sales and accounts receivable, and ultimately into cash at a faster pace in 2023 compared to previous years. This improved efficiency could positively impact the company's overall financial health and liquidity.