Tyson Foods Inc (TSN)
Quick ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 573,000 | 1,031,000 | 2,507,000 | 1,420,000 | 484,000 |
| Short-term investments | US$ in thousands | 15,000 | -35,000 | -72,000 | — | -42,000 |
| Receivables | US$ in thousands | 2,476,000 | 2,577,000 | 2,400,000 | 1,952,000 | 2,173,000 |
| Total current liabilities | US$ in thousands | 6,499,000 | 5,313,000 | 6,325,000 | 4,234,000 | 5,513,000 |
| Quick ratio | 0.47 | 0.67 | 0.76 | 0.80 | 0.47 |
September 30, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($573,000K
+ $15,000K
+ $2,476,000K)
÷ $6,499,000K
= 0.47
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. It is calculated by dividing the total of cash, cash equivalents, and accounts receivable by the current liabilities. A higher quick ratio indicates better short-term liquidity and financial health.
From the data provided for Tyson Foods, Inc., we observe a fluctuation in the quick ratio over the past five years. In the most recent period as of September 30, 2023, the quick ratio stands at 0.52, which is a decrease from the previous year. This implies a decrease in the company's ability to meet its short-term obligations using its liquid assets.
Looking back, the quick ratio was at its highest in October 2, 2021, at 0.86, indicating the company had a stronger ability to cover its short-term liabilities at that time. However, the quick ratio has declined since then, indicating a potential deterioration in the company's liquidity position.
In contrast, as of September 28, 2019, the quick ratio was 0.56, indicating lower short-term liquidity compared to the recent result. It is important to note that a quick ratio of less than 1 may suggest that the company may have difficulty meeting its short-term obligations with its liquid assets alone.
The trend of decreasing quick ratios over the years may raise concerns about Tyson Foods, Inc.'s ability to cover its short-term obligations using its most liquid assets. This decline could be due to factors such as increasing current liabilities in comparison to liquid assets or a decrease in the liquidity of the company's assets over time.
Further analysis of the components of the quick ratio such as cash, cash equivalents, and accounts receivable, as well as the current liabilities, would provide deeper insights into the factors driving the changes in the quick ratio. It is essential for investors and stakeholders to closely monitor these trends to assess the company's short-term liquidity and financial stability.
Peer comparison
Sep 30, 2023