Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
O’Reilly Automotive Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
- Current Ratio
- The current ratio demonstrates a generally declining trend over the observed periods. Starting at approximately 0.92 in early 2018, it experienced minor fluctuations but showed an overall downward movement, reaching around 0.7 by the third quarter of 2022. This decline suggests a gradual reduction in the company’s short-term liquidity, indicating it holds fewer current assets relative to current liabilities as time progresses.
- Quick Ratio
- The quick ratio remained quite low throughout the periods, starting near 0.09 in the first quarter of 2018 and exhibiting slight fluctuations thereafter. Notably, it peaked during mid-2020 with values close to 0.35 but reverted to lower values by late 2022, approximately 0.08. This pattern indicates a temporary improvement in highly liquid assets excluding inventory during the mid-2020 period, potentially reflecting a strategic accumulation of liquid resources before returning to a more conservative liquidity position.
- Cash Ratio
- The cash ratio remained extremely low initially, around 0.01 through early 2019. A significant increase occurred in mid-2020, reaching a peak near 0.29, indicating a marked rise in cash and cash equivalents relative to current liabilities during that period. Subsequently, the ratio declined steadily, falling back to nearly 0.01 by the third quarter of 2022. The temporary spike might reflect a response to extraordinary circumstances, such as a need for greater liquidity during an uncertain financial environment, followed by normalization afterwards.
- Overall Analysis
- Overall, the company’s liquidity ratios portray a pattern of generally low and decreasing liquidity over the observed time horizon, with noticeable temporary improvements during the middle of 2020. The current ratio’s gradual decline suggests tightening short-term financial flexibility. The brief elevation in quick and cash ratios around 2020 may indicate a deliberate strengthening of highly liquid asset holdings possibly linked to external market conditions or internal risk management strategies. However, the subsequent return to lower levels implies that such measures were either short-lived or adjusted as conditions stabilized.
Current Ratio
O’Reilly Automotive Inc., current ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Current assets | 4,760,756) | 4,799,872) | 4,523,381) | 4,504,262) | 4,562,209) | 4,738,347) | 4,687,639) | 4,499,787) | 5,533,441) | 4,784,485) | 4,201,800) | 3,833,662) | 3,724,489) | 3,700,573) | 3,649,646) | 3,543,102) | 3,560,031) | 3,500,717) | 3,446,411) | ||||||
| Current liabilities | 6,841,479) | 6,413,189) | 6,170,873) | 5,874,615) | 5,989,754) | 5,771,612) | 5,903,078) | 5,262,417) | 5,669,384) | 5,022,136) | 4,624,932) | 4,469,427) | 4,580,854) | 4,360,392) | 4,326,332) | 3,894,020) | 3,905,081) | 3,818,918) | 3,748,181) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Current ratio1 | 0.70 | 0.75 | 0.73 | 0.77 | 0.76 | 0.82 | 0.79 | 0.86 | 0.98 | 0.95 | 0.91 | 0.86 | 0.81 | 0.85 | 0.84 | 0.91 | 0.91 | 0.92 | 0.92 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Current Ratio, Competitors2 | |||||||||||||||||||||||||
| Amazon.com Inc. | 0.94 | 0.95 | 0.96 | 1.14 | 1.12 | 1.20 | 1.05 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Home Depot Inc. | 1.13 | 1.06 | 1.10 | 1.23 | 1.36 | 1.30 | 1.17 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lowe’s Cos. Inc. | 1.19 | 1.16 | 1.17 | 1.19 | 1.38 | 1.30 | 1.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| TJX Cos. Inc. | 1.29 | 1.33 | 1.52 | 1.46 | 1.41 | 1.51 | 2.20 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Current ratio = Current assets ÷ Current liabilities
= 4,760,756 ÷ 6,841,479 = 0.70
2 Click competitor name to see calculations.
The quarterly financial data reveals several notable trends in the company's liquidity position over the reviewed periods. Current assets and current liabilities both demonstrate a general upward trajectory, indicating growth in the scale of short-term resources and obligations.
- Current Assets
- Current assets increased from approximately $3.45 billion in the first quarter of 2018 to around $4.76 billion by the third quarter of 2022. This growth reflects a steady accumulation of liquid and near-liquid resources over the examined timeframe. While there is some variability across quarters, the overall trend is upward, suggesting increased asset management or expansion of working capital.
- Current Liabilities
- Current liabilities also rose significantly, from roughly $3.75 billion in early 2018 to about $6.84 billion by late 2022. The increase in liabilities outpaced that of current assets, which may indicate heightened short-term obligations or increased use of short-term financing.
- Current Ratio
- The current ratio consistently remained below 1.0 throughout the periods, pointing to current liabilities exceeding current assets. Starting at 0.92 in early 2018, the ratio declined to 0.70 by the third quarter of 2022. This decreasing trend indicates a weakening liquidity position, with the company's ability to cover its short-term liabilities with its short-term assets gradually diminishing over time.
In summary, while both current assets and current liabilities have increased over the years, the proportion of liabilities relative to assets has risen more sharply. The declining current ratio below the critical threshold of 1.0 emphasizes a potential risk in meeting short-term liabilities and suggests a need for closer monitoring of working capital management and liquidity strategies.
Quick Ratio
O’Reilly Automotive Inc., quick ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Cash and cash equivalents | 67,060) | 253,904) | 191,546) | 362,113) | 449,302) | 631,618) | 610,880) | 465,640) | 1,627,098) | 872,423) | 287,067) | 40,406) | 42,804) | 55,809) | 56,717) | 31,315) | 40,019) | 36,868) | 38,525) | ||||||
| Accounts receivable, net | 338,122) | 330,672) | 305,358) | 272,562) | 282,883) | 273,148) | 265,914) | 229,679) | 243,192) | 243,660) | 221,167) | 214,915) | 224,033) | 262,227) | 250,680) | 192,026) | 242,692) | 241,142) | 224,386) | ||||||
| Amounts receivable from suppliers | 135,584) | 123,112) | 99,016) | 113,112) | 110,882) | 113,174) | 114,697) | 100,615) | 90,341) | 86,513) | 83,446) | 79,492) | 76,107) | 77,750) | 66,452) | 78,155) | 83,237) | 78,950) | 78,232) | ||||||
| Total quick assets | 540,766) | 707,688) | 595,920) | 747,787) | 843,067) | 1,017,940) | 991,491) | 795,934) | 1,960,631) | 1,202,596) | 591,680) | 334,813) | 342,944) | 395,786) | 373,849) | 301,496) | 365,948) | 356,960) | 341,143) | ||||||
| Current liabilities | 6,841,479) | 6,413,189) | 6,170,873) | 5,874,615) | 5,989,754) | 5,771,612) | 5,903,078) | 5,262,417) | 5,669,384) | 5,022,136) | 4,624,932) | 4,469,427) | 4,580,854) | 4,360,392) | 4,326,332) | 3,894,020) | 3,905,081) | 3,818,918) | 3,748,181) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Quick ratio1 | 0.08 | 0.11 | 0.10 | 0.13 | 0.14 | 0.18 | 0.17 | 0.15 | 0.35 | 0.24 | 0.13 | 0.07 | 0.07 | 0.09 | 0.09 | 0.08 | 0.09 | 0.09 | 0.09 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Quick Ratio, Competitors2 | |||||||||||||||||||||||||
| Amazon.com Inc. | 0.42 | 0.43 | 0.48 | 0.68 | 0.64 | 0.76 | 0.63 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Home Depot Inc. | 0.32 | 0.30 | 0.37 | 0.47 | 0.68 | 0.69 | 0.48 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lowe’s Cos. Inc. | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| TJX Cos. Inc. | 0.65 | 0.77 | 0.95 | 1.01 | 0.93 | 0.92 | 0.96 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 540,766 ÷ 6,841,479 = 0.08
2 Click competitor name to see calculations.
The analysis of the quarterly financial trends shows significant fluctuations in both the total quick assets and current liabilities, impacting the quick ratio over the examined periods.
- Total Quick Assets
- Over the timeline, total quick assets displayed considerable variability. Starting at approximately $341 million in early 2018, these assets generally increased, peaking notably towards mid-2020 with values exceeding $1.9 billion, reflecting a substantial rise likely due to liquidity management or operational factors. However, post this peak, total quick assets declined sharply by the end of 2020 and fluctuated in 2021 and 2022, ultimately showing a downward trajectory toward the latter part of 2022 with values around $541 million.
- Current Liabilities
- Current liabilities showed a consistent upward trend throughout the periods examined. Starting from roughly $3.7 billion in early 2018, the liabilities climbed steadily each quarter, reaching approximately $6.8 billion by late 2022. The consistent increase in current liabilities suggests growing short-term obligations or increased operational scale.
- Quick Ratio
- The quick ratio, representing the liquidity position, remained low across the periods, generally under 0.1 prior to 2020. There was a marked increase starting in the first quarter of 2020, peaking at 0.35 by the third quarter of that year, indicating a temporary improvement in liquidity. Nevertheless, following this spike, the ratio decreased again, stabilizing at levels between 0.08 and 0.18 through 2021 and into 2022. The overall low quick ratio indicates limited coverage of current liabilities by liquid assets, except for a brief improvement around 2020.
In summary, the company experienced a temporary improvement in liquidity during 2020 driven by a sharp increase in quick assets, but this was not sustained as quick assets declined thereafter while liabilities continued to grow consistently. The liquidity position remains constrained relative to current liabilities for most of the period analyzed.
Cash Ratio
O’Reilly Automotive Inc., cash ratio calculation (quarterly data)
| Sep 30, 2022 | Jun 30, 2022 | Mar 31, 2022 | Dec 31, 2021 | Sep 30, 2021 | Jun 30, 2021 | Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | |||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | |||||||||||||||||||||||||
| Cash and cash equivalents | 67,060) | 253,904) | 191,546) | 362,113) | 449,302) | 631,618) | 610,880) | 465,640) | 1,627,098) | 872,423) | 287,067) | 40,406) | 42,804) | 55,809) | 56,717) | 31,315) | 40,019) | 36,868) | 38,525) | ||||||
| Total cash assets | 67,060) | 253,904) | 191,546) | 362,113) | 449,302) | 631,618) | 610,880) | 465,640) | 1,627,098) | 872,423) | 287,067) | 40,406) | 42,804) | 55,809) | 56,717) | 31,315) | 40,019) | 36,868) | 38,525) | ||||||
| Current liabilities | 6,841,479) | 6,413,189) | 6,170,873) | 5,874,615) | 5,989,754) | 5,771,612) | 5,903,078) | 5,262,417) | 5,669,384) | 5,022,136) | 4,624,932) | 4,469,427) | 4,580,854) | 4,360,392) | 4,326,332) | 3,894,020) | 3,905,081) | 3,818,918) | 3,748,181) | ||||||
| Liquidity Ratio | |||||||||||||||||||||||||
| Cash ratio1 | 0.01 | 0.04 | 0.03 | 0.06 | 0.08 | 0.11 | 0.10 | 0.09 | 0.29 | 0.17 | 0.06 | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | 0.01 | ||||||
| Benchmarks | |||||||||||||||||||||||||
| Cash Ratio, Competitors2 | |||||||||||||||||||||||||
| Amazon.com Inc. | 0.42 | 0.43 | 0.48 | 0.68 | 0.64 | 0.76 | 0.63 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Home Depot Inc. | 0.19 | 0.17 | 0.24 | 0.34 | 0.58 | 0.58 | 0.37 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| Lowe’s Cos. Inc. | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
| TJX Cos. Inc. | 0.60 | 0.71 | 0.89 | 0.97 | 0.90 | 0.87 | 0.92 | — | — | — | — | — | — | — | — | — | — | — | — | ||||||
Based on: 10-Q (reporting date: 2022-09-30), 10-Q (reporting date: 2022-06-30), 10-Q (reporting date: 2022-03-31), 10-K (reporting date: 2021-12-31), 10-Q (reporting date: 2021-09-30), 10-Q (reporting date: 2021-06-30), 10-Q (reporting date: 2021-03-31), 10-K (reporting date: 2020-12-31), 10-Q (reporting date: 2020-09-30), 10-Q (reporting date: 2020-06-30), 10-Q (reporting date: 2020-03-31), 10-K (reporting date: 2019-12-31), 10-Q (reporting date: 2019-09-30), 10-Q (reporting date: 2019-06-30), 10-Q (reporting date: 2019-03-31), 10-K (reporting date: 2018-12-31), 10-Q (reporting date: 2018-09-30), 10-Q (reporting date: 2018-06-30), 10-Q (reporting date: 2018-03-31).
1 Q3 2022 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 67,060 ÷ 6,841,479 = 0.01
2 Click competitor name to see calculations.
The financial data reveals several notable trends regarding liquidity and short-term obligations over the analyzed periods.
- Total Cash Assets
- There is a pronounced increase in total cash assets starting in the first quarter of 2020, with values rising sharply from approximately 28.7 million to a peak exceeding 1.6 billion in the third quarter of 2020. Following this peak, the cash balance decreases substantially over subsequent quarters, ending near 67 million by the third quarter of 2022. Prior to 2020, cash assets were relatively stable, fluctuating modestly between approximately 31 and 56 million.
- Current Liabilities
- Current liabilities show a generally steady upward trend throughout the entire period. From around 3.7 billion in early 2018, liabilities rise consistently, reaching approximately 6.8 billion by the third quarter of 2022. Despite some minor quarter-to-quarter fluctuations, the overall path indicates growing short-term obligations.
- Cash Ratio
- The cash ratio remains quite low and stable, near 0.01, until the first quarter of 2020. It then experiences a significant spike, reaching as high as 0.29 in the third quarter of 2020, reflecting the temporary surge in cash relative to current liabilities during that period. After this peak, the ratio declines steadily through the subsequent quarters, returning to levels close to 0.01 by late 2022.
The sharp increase and subsequent decline in cash assets and cash ratio during 2020 suggest a substantial, but temporary, accumulation of cash reserves. This could indicate strategic liquidity management, possibly in response to external factors impacting the business environment. Meanwhile, the rising trend in current liabilities points to an increase in short-term financial commitments over the long term. Overall, the liquidity position, as measured by cash in relation to short-term liabilities, appears to have been significantly elevated only for a limited period before reverting to previous lower levels.