Analysis of Liquidity Ratios
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Walgreens Boots Alliance Inc., liquidity ratios
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
- Current Ratio
- The current ratio exhibited a downward trend over the analyzed period. Starting at 1.38 in 2014, it fluctuated slightly in the initial years but showed a consistent decline from 2016 onwards, reaching a low of 0.73 in 2019. This decline indicates a reduction in current assets relative to current liabilities, potentially signaling a weakening short-term liquidity position.
- Quick Ratio
- The quick ratio followed a similar declining pattern. It began at 0.66 in 2014, experienced a temporary increase up to 0.94 in 2016, but then decreased significantly in subsequent years to 0.32 in 2019. This pattern suggests a diminishing ability to cover current liabilities with more liquid current assets, excluding inventory.
- Cash Ratio
- The cash ratio demonstrated a pronounced decline from 0.30 in 2014 to 0.04 by 2018 and maintained this low level in 2019. This steep decrease reflects a substantial reduction in available cash and cash equivalents compared to current liabilities, indicating a more constrained immediate liquidity position.
Current Ratio
Walgreens Boots Alliance Inc., current ratio calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Current assets | 18,700) | 17,846) | 19,753) | 25,883) | 19,657) | 12,242) | |
| Current liabilities | 25,769) | 21,667) | 18,547) | 17,013) | 16,557) | 8,895) | |
| Liquidity Ratio | |||||||
| Current ratio1 | 0.73 | 0.82 | 1.07 | 1.52 | 1.19 | 1.38 | |
| Benchmarks | |||||||
| Current Ratio, Competitors2 | |||||||
| Costco Wholesale Corp. | 1.01 | — | — | — | — | — | |
| Target Corp. | — | — | — | — | — | — | |
| Walmart Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 2019 Calculation
Current ratio = Current assets ÷ Current liabilities
= 18,700 ÷ 25,769 = 0.73
2 Click competitor name to see calculations.
- Current Assets
- The current assets exhibited significant fluctuation over the examined period. Starting at approximately $12.2 billion in 2014, these assets increased sharply to nearly $19.7 billion in 2015 and continued to rise to around $25.9 billion in 2016. However, thereafter, there was a decline, with current assets reducing to roughly $19.8 billion in 2017 and further declining to about $17.8 billion in 2018. A slight recovery was observed in 2019, with current assets rising modestly to $18.7 billion.
- Current Liabilities
- There was a consistent upward trend in current liabilities throughout the period. Beginning at about $8.9 billion in 2014, current liabilities almost doubled to $16.6 billion in 2015, followed by a steady increase to $17.0 billion in 2016, $18.5 billion in 2017, $21.7 billion in 2018, and peaking at $25.8 billion in 2019. This consistent rise indicates growing short-term financial obligations.
- Current Ratio
- The current ratio showed a generally declining trend, suggesting a weakening liquidity position. It started at a solid 1.38 in 2014, indicating healthy coverage of current liabilities by current assets. The ratio dipped to 1.19 in 2015, then peaked at 1.52 in 2016, the highest point in the period, signaling the strongest liquidity. From 2017 onwards, the ratio declined sharply: 1.07 in 2017, 0.82 in 2018, and further down to 0.73 in 2019. Ratios below 1 from 2018 suggest the company’s current assets were insufficient to cover current liabilities, which may warrant attention regarding short-term liquidity management.
Quick Ratio
Walgreens Boots Alliance Inc., quick ratio calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 1,023) | 785) | 3,301) | 9,807) | 3,000) | 2,646) | |
| Accounts receivable, net | 7,226) | 6,573) | 6,528) | 6,260) | 6,849) | 3,218) | |
| Total quick assets | 8,249) | 7,358) | 9,829) | 16,067) | 9,849) | 5,864) | |
| Current liabilities | 25,769) | 21,667) | 18,547) | 17,013) | 16,557) | 8,895) | |
| Liquidity Ratio | |||||||
| Quick ratio1 | 0.32 | 0.34 | 0.53 | 0.94 | 0.59 | 0.66 | |
| Benchmarks | |||||||
| Quick Ratio, Competitors2 | |||||||
| Costco Wholesale Corp. | 0.47 | — | — | — | — | — | |
| Target Corp. | — | — | — | — | — | — | |
| Walmart Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 2019 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 8,249 ÷ 25,769 = 0.32
2 Click competitor name to see calculations.
- Total Quick Assets
- The total quick assets demonstrate significant fluctuations over the analyzed period. Starting at $5,864 million in 2014, a strong increase was observed through 2015 and 2016, peaking at $16,067 million. However, from 2017 onwards, a marked decline is noticeable, with quick assets dropping to $7,358 million in 2018 before a slight recovery to $8,249 million in 2019.
- Current Liabilities
- Current liabilities show a consistent upward trend throughout the period. Beginning at $8,895 million in 2014, the figures steadily rose each year, reaching $25,769 million by 2019. This persistent increase indicates a rising short-term obligation load on the company.
- Quick Ratio
- The quick ratio declines notably over the years. Initially at 0.66 in 2014, the ratio decreased to 0.59 in 2015 before improving to 0.94 in 2016. Following this peak, there is a steady and significant deterioration to 0.32 by 2019. This decline suggests a weakening in the company's short-term liquidity position relative to its immediate liabilities.
- Summary
- Overall, while total quick assets rose sharply early in the period and then declined, current liabilities increased steadily throughout, leading to a decreasing quick ratio. This trend points to a potential concern regarding the company’s ability to cover short-term liabilities with its most liquid assets. The notable drop in quick ratio after 2016 reflects a weakening liquidity position that warrants monitoring and possibly strategic response to manage short-term financial risks.
Cash Ratio
Walgreens Boots Alliance Inc., cash ratio calculation, comparison to benchmarks
| Aug 31, 2019 | Aug 31, 2018 | Aug 31, 2017 | Aug 31, 2016 | Aug 31, 2015 | Aug 31, 2014 | ||
|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||||
| Cash and cash equivalents | 1,023) | 785) | 3,301) | 9,807) | 3,000) | 2,646) | |
| Total cash assets | 1,023) | 785) | 3,301) | 9,807) | 3,000) | 2,646) | |
| Current liabilities | 25,769) | 21,667) | 18,547) | 17,013) | 16,557) | 8,895) | |
| Liquidity Ratio | |||||||
| Cash ratio1 | 0.04 | 0.04 | 0.18 | 0.58 | 0.18 | 0.30 | |
| Benchmarks | |||||||
| Cash Ratio, Competitors2 | |||||||
| Costco Wholesale Corp. | 0.41 | — | — | — | — | — | |
| Target Corp. | — | — | — | — | — | — | |
| Walmart Inc. | — | — | — | — | — | — | |
Based on: 10-K (reporting date: 2019-08-31), 10-K (reporting date: 2018-08-31), 10-K (reporting date: 2017-08-31), 10-K (reporting date: 2016-08-31), 10-K (reporting date: 2015-08-31), 10-K (reporting date: 2014-08-31).
1 2019 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 1,023 ÷ 25,769 = 0.04
2 Click competitor name to see calculations.
- Total Cash Assets
- The total cash assets experienced significant fluctuations over the observed period. Initially, there was an increase from 2,646 million USD in 2014 to a peak of 9,807 million USD in 2016. Subsequently, a sharp decline occurred in 2017, reducing the cash holdings to 3,301 million USD. Following this, further decreases were observed, reaching as low as 785 million USD in 2018 before a modest recovery to 1,023 million USD in 2019. This pattern suggests a period of heightened liquidity around 2016, followed by a consistent reduction in cash reserves afterward.
- Current Liabilities
- Current liabilities showed a steady and marked increase throughout the six years. Starting from 8,895 million USD in 2014, the liabilities almost doubled by 2015 and continued to grow, reaching 25,769 million USD in 2019. This represents nearly a threefold increase over the period, indicating a consistent growth in short-term obligations which may reflect expansion or increased operational commitments.
- Cash Ratio
- The cash ratio, defined as the proportion of total cash assets to current liabilities, exhibited considerable volatility and a generally declining trend. Beginning at 0.3 in 2014, it decreased to 0.18 in 2015, surged to 0.58 in 2016 — corresponding with the peak in cash assets — and sharply dropped thereafter, reaching a low of 0.04 by 2018 and remaining at this level in 2019. This decline indicates a decreasing ability to cover current liabilities purely with cash, suggesting increasing liquidity risk or a strategic shift in asset management.