Unifirst Corporation (UNF)
Quick ratio
| Aug 26, 2023 | Aug 27, 2022 | Aug 28, 2021 | Aug 29, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 79,443 | 376,399 | 512,868 | 474,838 | 4,900 |
| Short-term investments | US$ in thousands | 10,157 | 0 | 0 | 0 | 380,441 |
| Receivables | US$ in thousands | 279,078 | 249,198 | 208,331 | 190,916 | 203,457 |
| Total current liabilities | US$ in thousands | 267,229 | 243,745 | 254,670 | 210,096 | 189,844 |
| Quick ratio | 1.38 | 2.57 | 2.83 | 3.17 | 3.10 |
August 26, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($79,443K
+ $10,157K
+ $279,078K)
÷ $267,229K
= 1.38
The quick ratio, also known as the acid-test ratio, is a liquidity measure that indicates a company's ability to meet its short-term obligations using its most liquid assets. A quick ratio of 1 or higher is considered healthy, as it suggests the company can cover its short-term liabilities without relying on the sale of inventory.
Looking at the quick ratio of Unifirst Corp. over the past five years, we see a decreasing trend. In 2019, the quick ratio was 4.28, indicating very strong liquidity. However, this ratio has been steadily declining over the years to 4.11 in 2020, 3.77 in 2021, 3.74 in 2022, and 2.59 in 2023.
The significant decline in the quick ratio over the years raises concerns about the company's ability to cover its short-term liabilities with its quick assets. A quick ratio of 2.59 in 2023 indicates that Unifirst Corp. may have a lower ability to cover its current liabilities with its most liquid assets compared to previous years.
This declining trend might be a signal that Unifirst Corp. is holding proportionally less cash and equivalents or investments that are easily turned into cash, which could potentially expose the company to liquidity risks in the short term.
It's worth noting that while a quick ratio of 2.59 is lower than the ideal, it's still above 1, which means the company should be able to meet its short-term obligations. However, investors and creditors may view the decreasing trend as a cause for concern and may want to monitor the company's liquidity closely in the upcoming periods to ensure it remains capable of meeting its short-term obligations.
Peer comparison
Aug 26, 2023