Unifirst Corporation (UNF)

Based on the data provided, we can observe the following trends in Unifirst Corporation's liquidity ratios over the past five years:

1. Current Ratio:
- Unifirst Corporation's current ratio has been relatively stable over the past five years, ranging from 3.14 to 4.36.
- The current ratio indicates the company's ability to meet its short-term obligations with its current assets. A current ratio above 1 typically signifies a company's ability to cover its short-term liabilities.

2. Quick Ratio:
- Unifirst Corporation's quick ratio has also shown consistency over the same period, varying from 1.38 to 2.83.
- The quick ratio provides a more stringent measure of liquidity as it excludes inventories from current assets, focusing on the most liquid assets like cash and accounts receivable.

3. Cash Ratio:
- Unifirst Corporation's cash ratio has demonstrated a similar pattern of stability, ranging from 0.34 to 2.26.
- The cash ratio is the most conservative liquidity measure, highlighting the company's ability to cover its current liabilities solely with cash and cash equivalents.

Overall, Unifirst Corporation has maintained healthy liquidity levels over the past five years, with current, quick, and cash ratios consistently above industry benchmarks. This indicates the company's strong ability to meet its short-term financial obligations and suggests prudent management of working capital.

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Additional liquidity measure

The cash conversion cycle of Unifirst Corporation has shown fluctuations over the past five years. In 2024, the company's cash conversion cycle decreased to 56.68 days from 59.18 days in 2023. This indicates that the company was able to convert its investments in inventory and accounts receivable into cash more efficiently in the most recent year compared to the prior year.

However, compared to 2020, the cash conversion cycle has increased in 2024, suggesting a potential deterioration in the company's working capital management efficiency over the past five years. Specifically, the cash conversion cycle increased from 51.72 days in 2020 to 56.68 days in 2024.

In general, a longer cash conversion cycle can signify inefficiencies in the company's operations, such as slow inventory turnover or extended collection periods for accounts receivable. Unifirst Corporation should monitor its cash conversion cycle closely and assess areas where improvements can be made to enhance cash flow and working capital management.