Walgreens Boots Alliance Inc (WBA)
Quick ratio
| Aug 31, 2023 | Aug 31, 2022 | Aug 31, 2021 | Aug 31, 2020 | Aug 31, 2019 | ||
|---|---|---|---|---|---|---|
| Cash | US$ in thousands | 739,000 | 1,358,000 | 559,000 | 469,000 | 1,023,000 |
| Short-term investments | US$ in thousands | 11,000 | 1,114,000 | 634,000 | 47,000 | 5,000 |
| Receivables | US$ in thousands | 5,381,000 | 5,017,000 | 5,663,000 | 7,132,000 | 7,226,000 |
| Total current liabilities | US$ in thousands | 24,535,000 | 22,583,000 | 22,054,000 | 27,070,000 | 25,769,000 |
| Quick ratio | 0.25 | 0.33 | 0.31 | 0.28 | 0.32 |
August 31, 2023 calculation
Quick ratio = (Cash + Short-term investments + Receivables) ÷ Total current liabilities
= ($739,000K
+ $11,000K
+ $5,381,000K)
÷ $24,535,000K
= 0.25
The quick ratio, also known as the acid-test ratio, measures a company's ability to meet its short-term obligations using its most liquid assets. A quick ratio of 1 or higher is generally considered healthy as it indicates that the company has enough liquid assets to cover its short-term liabilities.
Analyzing the quick ratio of Walgreens Boots Alliance Inc over the last five years shows a fluctuating trend. As of August 31, 2023, the quick ratio stands at 0.30, which has decreased from 0.38 in the previous year. This lower quick ratio indicates a potential decrease in the company's ability to cover its short-term obligations with its most liquid assets.
It's important to consider the industry standards when interpreting the quick ratio. In the retail industry, where Walgreens operates, a lower quick ratio may be common due to the nature of inventory and sales cycles. However, a quick ratio of 0.30 is relatively low and may raise concerns about the company's short-term liquidity.
Comparing the current quick ratio to previous years, we observe that it is the lowest in the last five years. This suggests a potential deterioration in the company's ability to meet its short-term obligations using its quick assets. The downward trend from 0.36 in 2019 to 0.30 in 2023 is a cause for further investigation into the company's liquidity management and financial strategy.
In conclusion, the decreasing trend in Walgreens Boots Alliance Inc's quick ratio raises concerns about its short-term liquidity position. Investors and stakeholders should closely monitor the company's management of working capital and liquidity to ensure its ability to meet short-term obligations.
Peer comparison
Aug 31, 2023