United Natural Foods Inc (UNFI)

The current ratio, which measures United Natural Foods Inc.'s ability to meet short-term liabilities with its current assets, has exhibited fluctuations over the past five years, decreasing from 1.69 in 2019 to 1.44 in 2023. However, the company has generally maintained a current ratio above 1, indicating a healthy ability to cover its short-term obligations.

The quick ratio, which provides a more stringent measure of short-term liquidity by excluding inventory from current assets, has also shown variance but has generally remained above 0.50. The decrease in the quick ratio from 0.63 in 2019 to 0.49 in 2023 reflects a potential increase in inventory relative to other current assets.

The cash ratio, which assesses the company's ability to cover its current liabilities with cash and cash equivalents, has also depicted fluctuation, ranging from 0.08 in 2021 to 0.13 in 2019. Despite the variability, the cash ratio has generally been low, indicating a reliance on sources other than cash to meet short-term obligations.

In summary, while the liquidity ratios of United Natural Foods Inc. have displayed some variability over the past five years, the company has generally maintained adequate liquidity to meet its short-term obligations, as evidenced by current ratios consistently above 1 and quick ratios above 0.50, although the low cash ratio suggests a reliance on non-cash sources for liquidity.

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Additional liquidity measure

The cash conversion cycle of United Natural Foods Inc. has shown a decreasing trend over the past five years. In the most recent fiscal year, the cash conversion cycle was 17.85 days, a notable improvement from 24.36 days in the prior year. This indicates that the company has been more efficient in managing its cash flow from the point of purchasing inventory to the collection of receivables from customers. The reduction in the cash conversion cycle suggests that United Natural Foods Inc. has been able to convert its investments in inventory into cash at a faster pace, which can be indicative of effective inventory management and improvements in the collection of receivables. This trend is positive as it signifies the company's ability to optimize its working capital and generate cash from its operational activities more efficiently.