Simply Good Foods Co (SMPL)

Quick ratio

		Aug 31, 2024	Aug 26, 2023	Aug 27, 2022	Aug 28, 2021	Aug 29, 2020
Cash	US$ in thousands	132,530	87,715	67,494	75,345	95,847
Short-term investments	US$ in thousands	—	—	—	—	3,644
Receivables	US$ in thousands	150,721	145,078	132,667	111,456	89,740
Total current liabilities	US$ in thousands	108,615	89,857	102,248	113,664	71,478
Quick ratio		2.61	2.59	1.96	1.64	2.65

August 31, 2024 calculation

Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($132,530K + $—K + $150,721K) ÷ $108,615K
= 2.61

The quick ratio of Simply Good Foods Co has demonstrated variability over the past five years, ranging from 1.64 to 2.65. Generally, a higher quick ratio indicates a stronger liquidity position, as it measures the company's ability to meet its short-term obligations using its most liquid assets.

In 2024, the quick ratio improved to 2.61 from the previous year's ratio of 2.59, suggesting that the company had slightly more liquid assets relative to its current liabilities. This improvement indicates a better short-term financial position compared to the prior year.

Although the quick ratio in 2022 decreased to 1.96 from 2021's ratio of 1.64, it remained above 1, indicating that Simply Good Foods Co had enough liquid assets to cover its short-term obligations at that time. However, the decrease in the quick ratio in 2022 may warrant further examination to understand the factors contributing to the decline in liquidity.

The quick ratio spiked to 2.65 in 2020, reflecting a significant increase in the company's liquidity compared to the preceding years. This high quick ratio suggests that Simply Good Foods Co had a strong ability to cover its short-term liabilities with its readily available assets in 2020.

Overall, fluctuations in the quick ratio of Simply Good Foods Co over the past five years reflect changes in the company's liquidity position. Analyzing the trend in the quick ratio can provide insights into the company's ability to manage its short-term financial obligations and its overall financial health.