Performance Food Group Co (PFGC)

The liquidity position of Performance Food Group Co over the observed period demonstrates a generally stable but gradually improving trend across key ratios.

The current ratio, which measures the company’s ability to meet its short-term obligations with its short-term assets, consistently remains above 1.5 throughout most of the examined timeline, indicating a strong liquidity buffer. Starting at 1.52 on September 30, 2020, the ratio experienced minor fluctuations, reaching a peak of 1.77 on September 30, 2023, before settling at 1.58 by June 30, 2025. This steady level above 1.5 suggests the company maintains adequate working capital to cover short-term liabilities, with slight improvements indicating enhanced liquidity management in recent periods.

The quick ratio, which assesses immediate liquidity by excluding inventory from current assets, shows a similar trend, remaining well above 0.6 across the period. It started at 0.82 on September 30, 2020, with modest fluctuations, reaching a peak of 0.69 on June 30, 2023, and maintaining relatively stable levels thereafter. These figures imply that the company has sufficient liquid assets such as receivables and cash to cover immediate obligations without relying on inventory sales, which is a positive signal of short-term financial health.

Conversely, the cash ratio, reflecting the most conservative liquidity measure by considering only cash and cash equivalents relative to current liabilities, remains relatively low throughout the period. It fluctuated from 0.18 on September 30, 2020, dipping to near zero in certain quarters, and generally staying below 0.02 thereafter. Although this indicates limited cash reserves relative to current liabilities, it is typical for companies of this nature to maintain low cash ratios, relying instead on receivables and other liquid assets for liquidity purposes.

Overall, Performance Food Group Co exhibits a consistent and adequate liquidity profile, with current and quick ratios remaining comfortably above critical thresholds, indicating a prudent short-term financial position. The persistently low cash ratio suggests reliance on other liquid assets and ongoing operational cash flows to support liabilities rather than holding large cash reserves. This liquidity structure appears sufficient for operational stability, though ongoing monitoring of cash levels would be prudent to ensure continued short-term financial flexibility.

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Additional liquidity measure

The cash conversion cycle (CCC) of Performance Food Group Co over the period from September 30, 2020, through June 30, 2025, demonstrates notable stability with fluctuations within a relatively narrow range. Initially, the CCC was approximately 21.48 days at the end of September 2020. It increased slightly to around 23.94 days at the end of December 2020 and then decreased to approximately 19.90 days by March 2021, indicating a reduction in the time to convert investments in inventory and receivables into cash.

Throughout 2021, the CCC exhibited some variability, reaching a peak of approximately 30.19 days in September 2021 before decreasing again to about 21.25 days by December 2021. During this period, the company appeared to optimize its working capital cycle, reducing the duration between cash outflows for inventory and receipts from customers.

In 2022, the CCC remained relatively consistent, fluctuating between roughly 20.15 days (March 2022) and 23.74 days (June 2022), with a slight increase by September 2022 to approximately 20.46 days and stabilization afterward. The cycle slightly increased towards the end of 2022, reaching approximately 21.25 days.

In 2023, the CCC continued to demonstrate stability with minor variations around the 20-day mark. The lowest recorded was approximately 19.61 days in March 2024, with an uptick to around 22.02 days by September 2024. The values suggest sustained efficiency in managing inventory and receivables within a narrow and moderate range.

Overall, the performance group's cash conversion cycle indicates consistent operational efficiency in managing working capital. The cycle's average duration typically hovers around 20 to 22 days, reflecting effective processes in inventory turnover, receivables collection, and payables management. The limited fluctuations across the observed period point to stable liquidity management practices, with no significant or sustained deterioration in the cash conversion cycle arrangements.