Sally Beauty Holdings Inc (SBH)
Quick ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 123,001 | 70,558 | 400,959 | 514,151 | 71,495 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Receivables | US$ in thousands | 33,421 | 34,102 | 32,623 | 35,590 | 43,136 |
| Total current liabilities | US$ in thousands | 579,257 | 667,914 | 664,881 | 563,362 | 456,079 |
| Quick ratio | 0.27 | 0.16 | 0.65 | 0.98 | 0.25 |
September 30, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($123,001K
+ $—K
+ $33,421K)
÷ $579,257K
= 0.27
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. It is calculated by using the formula: (Current Assets - Inventory) / Current Liabilities.
Looking at Sally Beauty Holdings Inc's quick ratio over the past five years, we can observe significant fluctuations.
As of September 30, 2023, the quick ratio stands at 0.44, indicating that for every dollar of current liabilities, the company has $0.44 of highly liquid assets available to cover those obligations. This suggests a slight improvement compared to the previous year's quick ratio of 0.29.
In the prior year, September 30, 2022, the quick ratio was significantly lower at 0.29, raising concerns about the company's short-term liquidity. However, it rebounded in the subsequent year, September 30, 2021, reaching 0.77, indicating an improvement in the ability to cover short-term liabilities with liquid assets.
In the fiscal year ending September 30, 2020, the quick ratio was relatively high at 1.10, suggesting a robust liquidity position. This was a significant improvement from the quick ratio of 0.46 in the fiscal year ending September 30, 2019, which had indicated weaker short-term liquidity.
The fluctuation in the quick ratio over the years indicates changes in the company's liquidity position. A quick ratio below 1.0 may cause concern as it suggests the company may struggle to meet its short-term obligations using only its most liquid assets. It would be beneficial to further investigate the composition of current assets and their liquidity to gain deeper insights into the company's short-term financial health and ability to manage its liabilities.
Peer comparison
Sep 30, 2023