Valvoline Inc (VVV)
Current ratio
| Sep 30, 2023 | Sep 30, 2022 | Sep 30, 2021 | Sep 30, 2020 | Sep 30, 2019 | ||
|---|---|---|---|---|---|---|
| Total current assets | US$ in thousands | 936,700 | 1,621,100 | 1,037,100 | 1,438,000 | 797,000 |
| Total current liabilities | US$ in thousands | 362,300 | 919,400 | 568,700 | 444,000 | 423,000 |
| Current ratio | 2.59 | 1.76 | 1.82 | 3.24 | 1.88 |
September 30, 2023 calculation
Current ratio = Total current assets ÷ Total current liabilities
= $936,700K ÷ $362,300K
= 2.59
The current ratio measures a company's ability to meet its short-term obligations with its short-term assets. It is calculated by dividing current assets by current liabilities.
Analyzing Valvoline Inc's current ratio over the past five years, we observe the following trends:
1. Sep 30, 2023: The current ratio has increased to 2.59 from 1.76 in the previous year. This suggests that Valvoline Inc's short-term liquidity position has improved significantly. The company now has $2.59 in current assets for every $1 in current liabilities, indicating a strong ability to meet its short-term debt obligations.
2. Sep 30, 2022: The current ratio decreased to 1.76 from 1.82 in the prior year. This decline may indicate a reduction in short-term liquidity or an increase in short-term debt obligations. It is essential to assess the reasons behind this change to determine its impact on the company's financial health.
3. Sep 30, 2021: The current ratio decreased slightly to 1.82 from 3.24 in the previous year. This significant drop in the current ratio raises concerns about Valvoline Inc's ability to cover its short-term liabilities with its current assets. Further investigation into the reasons for this decline is necessary.
4. Sep 30, 2020: The current ratio was 3.24, reflecting a substantial increase from 1.88 in the prior year. This surge indicates a significant improvement in Valvoline Inc' short-term liquidity position. The company had $3.24 in current assets for every $1 in current liabilities, signifying a robust ability to fulfill its short-term financial obligations.
5. Sep 30, 2019: The current ratio stood at 1.88, which suggests that Valvoline Inc had $1.88 in current assets for every $1 in current liabilities. While this ratio indicates that the company could meet its short-term obligations, it is lower than the ratios in later years, indicating a stronger liquidity position in subsequent years.
In conclusion, the analysis of Valvoline Inc's current ratio demonstrates the company's fluctuating short-term liquidity position over the past five years. The substantial increase in the current ratio in 2020 was a positive sign, while the subsequent fluctuations call for a thorough investigation into the factors driving these changes. This comprehensive examination is essential for a complete understanding of Valvoline Inc's financial health.
Peer comparison
Sep 30, 2023