O’Reilly Automotive Inc. (NASDAQ:ORLY)

Current Ratio

The current ratio demonstrated relative stability from March 2017 through December 2018, maintaining values close to 0.91 to 0.93, indicating a consistent level of current assets relative to current liabilities. However, starting in early 2019, the ratio showed a declining trend, dropping to as low as 0.70 by September 2022. Notably, there were minor fluctuations throughout 2019 and 2020, with a brief rebound toward 0.98 in September 2020 before declining again. Overall, the decreasing current ratio trend signals diminishing short-term liquidity over the observed period.

Quick Ratio

The quick ratio remained very low throughout the entire period, generally ranging between 0.07 and 0.09 from 2017 to early 2019, signifying limited liquid assets excluding inventory to cover current liabilities. There was a notable uptick starting from early 2020, peaking at 0.35 in September 2020, likely linked to an increase in liquid assets during that period. Following this peak, the ratio again declined steadily, falling to 0.08 by the third quarter of 2022. This pattern reflects transient improvements in liquid asset coverage followed by reductions.

Cash Ratio

The cash ratio was minimal and stable at 0.01 for most of the period from 2017 to 2019, indicating very limited cash or cash equivalents relative to current liabilities. There was a significant increase starting in the first quarter of 2020, with the ratio peaking at 0.29 in September 2020, mirroring the pattern seen in the quick ratio and suggesting enhanced cash holdings during this timeframe. Post-September 2020, the cash ratio decreased progressively, ending at 0.01 again by September 2022. This fluctuation implies a temporary improvement in cash liquidity that was not sustained long-term.

The analysis of the quarterly financial data indicates notable trends in liquidity measures over the observed periods. The current assets exhibit a generally increasing pattern from the beginning of 2017 through 2022, starting at approximately 3.21 billion US dollars and reaching peaks near 5.53 billion in late 2020, before moderating in subsequent quarters.

Current liabilities also demonstrate a rising trajectory throughout the same timeframe. They increase from about 3.51 billion US dollars in early 2017 to a high point exceeding 6.84 billion by the third quarter of 2022. This growth in liabilities outpaces that of current assets in later periods, contributing to changes in liquidity ratios.

The current ratio, which measures the company's ability to cover short-term obligations with current assets, shows a declining trend overall. Initially, it hovers near 0.91 to 0.93 from 2017 into early 2018, indicating a relatively balanced liquidity position. This ratio dips below 0.85 during 2019 (reaching lows around 0.81), then temporarily recovers to near 0.95 in late 2020, reflecting improved liquidity at that time.

Following the late 2020 peak, the current ratio declines steadily, falling below 0.8 by mid-2021 and continuing downward to approximately 0.70 by the third quarter of 2022. This downward movement suggests increasing pressure on the company's short-term liquidity, as current liabilities grow faster than current assets in recent quarters.

Overall, despite growth in both current assets and liabilities, the current ratio's decline signals heightened liquidity risk that may warrant attention. The company's ability to meet short-term obligations from current resources has weakened, particularly from 2021 onward, which could impact operational flexibility and financial stability if the trend persists.

Total Quick Assets

The total quick assets demonstrate an overall upward trajectory from March 2017 through September 2020, starting at approximately 294 million US dollars and peaking near 1.96 billion US dollars. This sharp increase is especially notable during 2020, with a significant rise from the first quarter to the third quarter. However, after this peak in the third quarter of 2020, the value declines substantially into early 2021 and continues a downward trend through September 2022, ending around 541 million US dollars. The data suggests a period of rapid accumulation followed by a sizable reduction in liquid assets.

Current Liabilities

Current liabilities reveal a steady increase over the entire period analyzed, starting from roughly 3.5 billion US dollars in early 2017 and growing consistently to approximately 6.8 billion US dollars by September 2022. Despite some quarterly fluctuations, the general direction is upward, indicating an increasing level of obligations payable within a year.

Quick Ratio

The quick ratio remains low throughout the timeframe, fluctuating generally between 0.07 and 0.09 from 2017 to the end of 2019. A notable rise occurs beginning in the first quarter of 2020, reaching a peak of 0.35 in the third quarter of the same year, coinciding with the spike in quick assets. This improvement indicates a temporarily enhanced liquidity position relative to current liabilities. Following this peak, the ratio declines back toward previous lower levels, reaching as low as 0.08 by September 2022. This pattern suggests a temporary strengthening of short-term financial health that was not sustained in the longer term.

Summary of Trends

The data reflects a company managing growing current liabilities with relatively low liquidity reserves as measured by the quick ratio. There was a distinct period in 2020 where liquidity significantly improved, likely due to a substantial increase in quick assets, but this was followed by a correction and decline in liquidity measures despite continued growth in liabilities. Overall, the company appears to maintain a conservative quick ratio below 0.1 for much of the period, indicating that quick assets cover only a small portion of current liabilities, which may imply reliance on other forms of current asset liquidity or short-term financing.

Total Cash Assets

Total cash assets demonstrated significant volatility over the observed periods. From March 2017 through December 2019, the cash levels remained relatively stable, fluctuating mostly between approximately $27 million and $57 million. A notable surge began in March 2020, where cash assets dramatically increased, peaking at over $1.6 billion in September 2020. Subsequently, there was a sharp decline by December 2020, followed by moderate fluctuations. By September 2022, cash assets decreased again to roughly $67 million, resembling values closer to the pre-2020 period. This pattern indicates a substantial influx of cash during early 2020, which was not sustained long-term.

Current Liabilities

Current liabilities exhibited a consistent upward trend from March 2017 through September 2022. Starting at approximately $3.5 billion, liabilities increased steadily each period with some minor fluctuations, reaching about $6.8 billion by the end of the data series. This continuous rise suggests increasing short-term obligations over time, without periods of decline or significant volatility.

Cash Ratio

The cash ratio remained very low and stable around 0.01 from March 2017 to December 2019, implying a minimal buffer of cash relative to current liabilities. Beginning March 2020, the ratio sharply rose, peaking at 0.29 in September 2020, reflecting the simultaneous surge in cash assets during this period. However, after this peak, the ratio declined steadily, dropping to values as low as 0.01 by September 2022. This indicates that despite the temporary improvement in liquidity during 2020, the company's cash coverage relative to current liabilities returned to historically low levels afterward.