US Foods Holding Corp (USFD)
Liquidity ratios
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | |
|---|---|---|---|---|---|
| Current ratio | 1.21 | 1.30 | 1.37 | 1.41 | 1.75 |
| Quick ratio | 0.61 | 0.68 | 0.68 | 0.63 | 0.96 |
| Cash ratio | 0.02 | 0.09 | 0.08 | 0.06 | 0.42 |
US Foods Holding Corp's liquidity ratios indicate a declining trend over the years.
The current ratio, which measures the company's ability to cover short-term liabilities with current assets, decreased from 1.75 in December 2020 to 1.21 in December 2024. Despite remaining above 1, the decreasing trend suggests a potential weakening ability to meet short-term obligations.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also decreased from 0.96 in December 2020 to 0.61 in December 2024. This indicates that the company's ability to meet immediate short-term obligations with its most liquid assets has decreased.
Furthermore, the cash ratio, which shows the proportion of cash and cash equivalents to current liabilities, dropped significantly from 0.42 in December 2020 to 0.02 in December 2024. This suggests a substantial decrease in the company's ability to cover its short-term liabilities solely with cash on hand.
Overall, US Foods Holding Corp's liquidity ratios reflect a deteriorating liquidity position, indicating a potential need for improved management of short-term assets and liabilities to ensure financial stability in the future.
Additional liquidity measure
| Dec 31, 2024 | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 12.94 | 14.48 | 15.77 | 18.63 | 18.32 |
US Foods Holding Corp's cash conversion cycle has shown a decreasing trend over the years, indicating an improvement in efficiency in managing its working capital.
As of December 31, 2020, the cash conversion cycle was 18.32 days, and it increased slightly to 18.63 days by December 31, 2021. However, the trend reversed from 2022 onwards, with the cash conversion cycle decreasing to 15.77 days by December 31, 2022, further dropping to 14.48 days by December 31, 2023, and then to 12.94 days by December 31, 2024.
The reduction in the cash conversion cycle suggests that US Foods Holding Corp has been able to collect payments from customers, manage inventory, and pay suppliers more efficiently over the years. A shorter cash conversion cycle indicates that the company is able to convert its investments in inventory and accounts receivable into cash more quickly, which can improve liquidity and overall financial performance.