Costco Wholesale Corp. (NASDAQ:COST)

Current Ratio Analysis

The current ratio displays a generally stable to slightly improving trend from late 2020 through early 2024, starting at 0.98 and reaching a peak of approximately 1.09 in early 2024. This indicates a moderate improvement in the company’s short-term liquidity position during this period. However, after this peak, the ratio declines somewhat, dipping below 1 around early 2024, before gradually recovering to about 1.04 by late 2025. Overall, the current ratio remains around the benchmark value of 1, suggesting consistent but narrowly balanced current asset coverage over current liabilities.

Quick Ratio Analysis

The quick ratio exhibits more volatility compared to the current ratio, fluctuating between a low of 0.38 and a high of 0.55 over the time span. From late 2020 to early 2024, there is a general upward movement from approximately 0.42 to 0.55, which signals an improvement in readily liquid assets excluding inventory. Nevertheless, around early 2024, the quick ratio experiences a significant drop to 0.38, indicating a reduction in liquid assets available to cover immediate liabilities. After this trough, the ratio recovers gradually to around 0.49 by late 2025. This pattern suggests some short-term liquidity pressure mid-period but a return to a more stable liquid position in the later periods.

Cash Ratio Analysis

The cash ratio follows a pattern broadly similar to the quick ratio but with generally lower values, ranging from around 0.30 to 0.49. It shows a steady rise from about 0.35 in late 2020 to a peak close to 0.49 in early 2024, reflecting improved availability of cash and cash equivalents to cover current liabilities. Subsequently, a marked decline occurs, dropping near 0.30 in early 2024, hinting at diminished cash reserves during that time. Following this decline, the cash ratio gradually increases again, reaching approximately 0.41 by late 2025. This trend indicates episodic fluctuations in highly liquid assets with a recovery phase towards the end of the period.

Summary of Liquidity Trends

Across the observed periods, the company maintains a stable to moderately improving liquidity position as measured by the current ratio, with values hovering around 1. The quick and cash ratios demonstrate more pronounced fluctuations, suggesting varying levels of liquid assets relative to short-term obligations. The dips in these tighter liquidity ratios around early 2024 imply episodes of tighter cash management or increased short-term liabilities funded by less liquid current assets. The subsequent recoveries point to improved liquid asset management or reduction in immediate liabilities. Overall, the liquidity ratios reflect a company maintaining cautious but effective management of its short-term financial obligations with occasional volatility in liquid asset availability.

The analysis of the quarterly financial data reveals several key trends in the company's liquidity position as reflected by current assets, current liabilities, and the current ratio over the examined periods.

Current Assets

Current assets demonstrate overall growth with some fluctuations. Starting at approximately $32.1 billion, current assets increased to a peak of around $40.1 billion in November 2023, indicating an accumulation of short-term resources. However, a notable decline followed with values dropping to the low $32 billion range in early 2024 before resuming an upward trajectory. By November 2025, current assets reached a new high of approximately $43.4 billion, suggesting improved asset accumulation or better working capital management over the longer term.

Current Liabilities

Current liabilities exhibit a similar pattern to current assets in terms of variability but with a generally upward trend as well. Beginning at about $32.7 billion, liabilities declined slightly during early periods but then increased gradually, reaching near $36.8 billion by November 2023. A drop followed in early 2024, mirroring the behavior of current assets, and liabilities again edged upward, closing at approximately $41.8 billion by November 2025. This trend indicates a proportional increase in short-term obligations alongside asset growth.

Current Ratio

The current ratio remained relatively stable throughout the periods, fluctuating modestly around the 1.0 mark. Initially, it hovered just below or near 1.0, indicating a balanced liquidity position where current assets were nearly sufficient to cover current liabilities. The ratio peaked at 1.09 in November 2023, reflecting a stronger liquidity position during that quarter. Following this peak, the ratio dipped below 1.0 in early 2024, reaching a low of 0.93, which could imply a momentary tightening of liquidity. Subsequently, the ratio gradually improved, stabilizing slightly above 1.0 in later periods, which suggests an enhanced ability to meet short-term obligations as time progressed.

In summary, the company exhibits a consistent effort to maintain a balanced liquidity position with current assets and liabilities growing in tandem over the long term. The temporary fluctuations in both assets and liabilities, as well as the current ratio, indicate responsiveness to operational needs and market conditions. The maintenance of a current ratio close to or above 1.0 throughout most periods signifies an adequate short-term financial health, enabling the company to cover its current liabilities with current assets effectively.

Trend in Total Quick Assets

The total quick assets displayed fluctuations across the periods. Initially, a decline was observed from 16,069 million USD in November 2020 to 11,188 million USD in February 2021, followed by a gradual recovery and rising trend reaching a peak of 20,406 million USD by November 2023. Afterwards, a significant decrease occurred, dropping to levels near 13,100 million USD by February 2024. The levels then stabilized and gradually increased again, ending at 20,414 million USD in November 2025.

Trend in Current Liabilities

Current liabilities showed a somewhat steady upward trend with minor fluctuations. Starting from 32,667 million USD in November 2020, there was a slight reduction in early 2021, but overall liabilities increased progressively. By November 2023, they reached 36,768 million USD and, despite a brief decline in early 2024, they continued to rise, finishing at 41,805 million USD by November 2025. This demonstrates increasing short-term obligations over the analyzed period.

Trend in Quick Ratio

The quick ratio remained below 1.0 throughout the entire timeline, indicating that quick assets consistently fell short of covering current liabilities fully. The ratio started at 0.49 in November 2020, declined to a low of 0.38 by February 2024, implying tighter liquidity conditions, then gradually improved again to about 0.50 by November 2025. Peaks in the quick ratio corresponded generally with peaks in total quick assets, while declines aligned with decreasing quick assets or rising current liabilities.

Liquidity Insights

The liquidity position demonstrated some volatility, influenced by fluctuations in quick assets and a generally rising current liability base. Although there were periods of improvement in liquidity, the quick ratio consistently remained below 0.6, signaling possible ongoing liquidity constraints. The drop to 0.38 in early 2024 highlights a critical period with relatively lower liquid asset coverage of short-term obligations.

Overall Financial Position Trends

The overall pattern suggests that while liquid assets experienced cyclical increases and decreases, current liabilities grew more steadily, putting pressure on liquidity ratios. Despite some recovery periods, the quick ratio’s persistent sub-1 level and the growth in current liabilities suggest that the company needs to manage its short-term liabilities carefully to maintain adequate liquidity. The data portrays a balance between aggressive growth or operational financing strategies and the company’s need to sustain a sound liquidity position.

The analysis of the quarterly financial data reveals notable trends across the reported periods. Total cash assets exhibit fluctuations, with an initial decline from 14,423 million USD to a low of 9,254 million USD followed by a recovery phase reaching peaks at various intervals, including 17,864 million USD and 17,183 million USD in the most recent quarters. However, a significant drop occurs in the period ending February 18, 2024, where cash assets fall to 10,321 million USD before stabilizing and rising again subsequently.

Current liabilities have generally trended upward over the periods observed. Starting at 32,667 million USD, current liabilities increased to a peak of 42,805 million USD by November 23, 2025. Although fluctuations occur quarterly, the overall trajectory reflects a gradual increase, signifying rising short-term obligations.

The cash ratio, which measures the liquidity position by comparing cash assets to current liabilities, varies between 0.3 and 0.49 across the time frame. This ratio shows a notable dip to 0.3 in early 2024, corresponding with the drop in total cash assets amid rising liabilities. Post this decline, the ratio recovers moderately and maintains a range near 0.4 in later quarters. The liquidity position, while fluctuating, generally indicates that cash assets cover roughly 30 to 49 percent of current liabilities, highlighting moderate liquidity with periods of tighter constraints.

Total Cash Assets

Initially decreases significantly, then generally recovers with intermittent increases and decreases, exhibiting volatility particularly around early 2024.

Current Liabilities

Overall upward trend indicates growing short-term financial obligations throughout the periods, reaching its highest levels in the latter reporting quarters.

Cash Ratio

Shows variability in liquidity levels, with moderate declines corresponding to periods of reduced cash reserves and higher liabilities. The ratio’s range suggests a liquidity buffer that is substantial but not excessive, with a cautious position in certain quarters.

In summary, the company's financial profile reveals cyclical fluctuations in cash holdings against a backdrop of steadily rising current liabilities. The liquidity ratio underscores moments of potential stress but generally stays within a moderate range. Stakeholders may benefit from monitoring these trends closely, particularly the declines in cash assets and associated impacts on liquidity, to ensure ongoing financial stability.