United Natural Foods Inc (UNFI)

United Natural Foods Inc's liquidity ratios have shown some fluctuations over the past five years. The current ratio, which measures the company's ability to cover short-term liabilities with current assets, has remained relatively stable, ranging from 1.43 to 1.57. This indicates that the company has generally had an adequate level of current assets to meet its short-term obligations.

On the other hand, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has shown a decreasing trend from 0.53 to 0.40 over the same period. This suggests that UNFI may have become less able to cover immediate liabilities with its most liquid assets.

Furthermore, the cash ratio, which specifically looks at the ability to cover short-term liabilities with cash and cash equivalents, has remained consistently low at 0.02 for each of the past five years. This indicates that the company holds minimal cash reserves relative to its current liabilities.

In summary, while United Natural Foods Inc has maintained a reasonable current ratio, its quick ratio has declined, and its cash ratio remains very low. This suggests that the company may have limited ability to cover its short-term obligations with its most liquid assets like cash and cash equivalents. Management should monitor these ratios closely to ensure adequate liquidity for ongoing operations.

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Additional liquidity measure

The cash conversion cycle of United Natural Foods Inc has shown a fluctuating trend over the last five years. In the most recent period ending August 3, 2024, the company's cash conversion cycle was 18.34 days, indicating that it takes approximately 18.34 days for the company to convert its investments in inventory and other resources into cash receipts from customers. This represents a slight increase compared to the prior year, where the cycle was 18.12 days.

Looking back further, in July 2022 and July 2021, the cash conversion cycle was 24.62 days and 24.81 days, respectively. This suggests that the company took longer to convert its resources into cash during those periods. However, there was a notable improvement in July 2022 compared to July 2021.

In August 2020, the cash conversion cycle was the longest at 26.16 days among the years presented. This indicates that the company took the longest time in that period to convert its investments into cash receipts.

Overall, changes in the cash conversion cycle may reflect variations in the company's efficiency in managing its working capital and operations. A shorter cash conversion cycle generally indicates a more efficient use of resources and quicker cash generation, while a longer cycle may suggest potential inefficiencies in the company's operations and working capital management.