Unifirst Corporation (UNF)

Unifirst Corp.'s liquidity ratios demonstrate a consistent and strong liquidity position over the past five years. The current ratio, which measures the company's ability to meet short-term liabilities with its short-term assets, has averaged 4.25, indicating a robust ability to cover its current obligations. The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also reflects a strong position, averaging 3.70 over the period. This suggests the company's ability to meet its short-term obligations without relying on selling inventory.

Moreover, the cash ratio, which specifically measures the ability to cover current liabilities with cash and cash equivalents, has remained healthy, averaging 2.74. This indicates that Unifirst Corp. possesses a solid level of readily available funds to meet its short-term obligations.

Overall, Unifirst Corp.'s liquidity ratios indicate a consistently high level of liquidity, providing the company with financial flexibility and the ability to meet its short-term obligations comfortably.

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Additional liquidity measure

The cash conversion cycle of Unifirst Corp. has shown some fluctuation over the past five years. In August 2023, the cash conversion cycle was 59.32 days, indicating that the company takes an average of 59.32 days to convert its resources into cash. This represents a slight improvement from the previous year, as the cycle was 64.83 days in August 2022. However, compared to August 2020 and 2021, the cash conversion cycle has not shown a significant change, remaining within the range of 51.86 to 64.83 days.

The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales. A shorter conversion cycle is generally seen as favorable, as it signifies that the company is efficiently managing its working capital and generating cash from its operations. Conversely, a longer cycle may indicate inefficiencies in inventory management or difficulties in collecting receivables.

Overall, Unifirst Corp.'s cash conversion cycle has shown some variability, but the recent improvement may suggest better management of working capital, which could positively impact the company's cash flow and liquidity. However, it would be important to assess the various components of the cash conversion cycle, such as inventory turnover and receivables collection, to gain a deeper understanding of the company's working capital management.