Valvoline Inc (VVV)
Cash ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 409,100 | 23,400 | 122,600 | 639,700 | 159,000 |
| Short-term investments | US$ in thousands | 347,500 | 0 | 107,400 | 120,300 | — |
| Total current liabilities | US$ in thousands | 362,300 | 919,400 | 568,700 | 444,000 | 423,000 |
| Cash ratio | 2.09 | 0.03 | 0.40 | 1.71 | 0.38 |
September 30, 2023 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($409,100K
+ $347,500K)
÷ $362,300K
= 2.09
The cash ratio measures a company's ability to cover its short-term liabilities with its cash and cash equivalents. A higher cash ratio indicates a stronger ability to cover short-term obligations.
Looking at Valvoline Inc's cash ratio over the past five years, we can observe significant fluctuations. In 2019, the cash ratio was 0.48, indicating that the company had $0.48 in cash and cash equivalents for every dollar of current liabilities. This ratio increased to 1.82 in 2020, suggesting a substantial improvement in the company's liquidity position. However, in 2021, the ratio dropped to 0.50, signaling a decrease in the ability to cover short-term obligations with available cash.
Notably, the cash ratio experienced a major surge in 2022, reaching 0.07, which is relatively low compared to the previous years. This low ratio might indicate a reduced ability to meet short-term liabilities with cash resources.
The most recent data for 2023 reveals a substantial improvement in the cash ratio, which reached 2.27. This indicates a significant strengthening of Valvoline Inc's liquidity position, with $2.27 in cash and cash equivalents available for every dollar of current liabilities.
In summary, Valvoline Inc has shown fluctuations in its cash ratio over the past five years, with a notable improvement in 2023. This suggests that the company has significantly enhanced its ability to cover short-term obligations with its available cash and cash equivalents. However, the significant fluctuations in the cash ratio over the years may signify the need for careful monitoring of the company's liquidity management.
Peer comparison
Sep 30, 2023