Sysco Corporation (SYY)

Sysco Corporation's liquidity ratios, based on the current ratio, quick ratio, and cash ratio, show varying levels of liquidity over the past few quarters.

Starting with the current ratio, which measures the company's ability to cover its short-term obligations with its current assets, we see that the ratio has fluctuated between 1.20 and 1.84 over the past few quarters. A current ratio above 1 indicates that Sysco has more current assets than current liabilities, which is generally considered a positive sign. However, the ratio has shown some volatility, possibly indicating fluctuations in working capital management.

Moving on to the quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, we see that Sysco's quick ratio has also varied significantly, ranging from 0.05 to 0.90. A quick ratio below 1 suggests that Sysco may have difficulty meeting its short-term obligations without relying on inventory. The sharp fluctuations in the quick ratio may signal challenges in managing cash and equivalents relative to short-term liabilities.

Lastly, looking at the cash ratio, which is the most rigorous measure of liquidity as it focuses solely on cash and cash equivalents to cover current liabilities, we observe substantial variability from 0.05 to 0.90. A cash ratio below 0.20 could indicate potential liquidity issues. The higher values suggest a stronger ability to cover short-term obligations with cash on hand specifically.

Overall, while Sysco Corporation generally maintains current ratios above 1, indicating adequate short-term liquidity, the fluctuations in quick and cash ratios suggest potential challenges in managing cash flow and quick liquidity. It may be beneficial for Sysco to focus on improving cash management practices to ensure more stable and reliable liquidity levels in the future.

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See also:

Sysco Corporation Liquidity Ratios (Quarterly Data)

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Additional liquidity measure

The cash conversion cycle of Sysco Corporation has shown fluctuations over the past several quarters. In the most recent quarter ending June 30, 2024, the company's cash conversion cycle was 15.59 days, indicating the average time it takes for Sysco to convert its investments in inventory and other resources into cash flows from sales. This was a slight decrease from the previous quarter, which had a cash conversion cycle of 19.50 days.

Looking back further, the company experienced negative cash conversion cycles in some quarters, such as -7.56 days in March 31, 2023, and -8.34 days in September 30, 2022. A negative cash conversion cycle suggests that Sysco was able to generate cash from its operating cycle before paying its suppliers, which can be a favorable indicator of efficient working capital management.

On the other hand, there were periods of longer cash conversion cycles, such as 19.88 days in December 31, 2022, and 19.08 days in December 31, 2023. A longer cash conversion cycle can indicate inefficiencies in managing inventory, collecting receivables, or paying suppliers promptly.

Overall, monitoring the cash conversion cycle is crucial for assessing the efficiency of Sysco Corporation's working capital management and its ability to generate cash flows from its core operations. fluctuations in this metric can provide insights into the company's operational effectiveness and financial health.