Walgreens Boots Alliance Inc (WBA)

Walgreens Boots Alliance Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, indicate the company's ability to meet its short-term financial obligations.

The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, has been fluctuating over the past five years. In 2024, it stands at 0.68, showing a slight improvement from the previous year but still below 1, suggesting potential difficulties in meeting short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. This ratio has been consistently low, with a value of 0.33 in 2024, indicating a limited ability to cover immediate liabilities with more liquid assets.

The cash ratio, which is the most conservative liquidity ratio, focuses solely on cash and cash equivalents as a percentage of current liabilities. Walgreens Boots Alliance Inc's cash ratio has shown improvement over the years, reaching 0.12 in 2024. This suggests the company has a slightly better ability to cover its short-term liabilities with cash on hand.

Overall, the liquidity ratios of Walgreens Boots Alliance Inc demonstrate ongoing challenges in managing short-term financial obligations effectively. The company may need to focus on improving its liquidity position to enhance its financial stability and weather potential economic uncertainties.

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See also:

Walgreens Boots Alliance Inc Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Walgreens Boots Alliance Inc has shown a decreasing trend over the past five years, indicating an improvement in the company's efficiency in managing its operating capital. In August 2020, the cash conversion cycle was the highest at 13.00 days, which then decreased progressively to 7.32 days in 2021, 5.90 days in 2022, and further to 3.32 days in 2023. The cycle reached its lowest point in August 2024 at 1.65 days.

This declining trend in the cash conversion cycle suggests that Walgreens Boots Alliance Inc has been able to shorten the time it takes to convert its investments in inventory into cash receipts from customers. A shorter cash conversion cycle indicates that the company is effectively managing its working capital, which may lead to improved liquidity and cash flow.

Overall, the consistent improvement in the cash conversion cycle of Walgreens Boots Alliance Inc reflects positively on the company's operational efficiency and effectiveness in managing its cash flow and working capital.