Walgreens Boots Alliance Inc. (NASDAQ:WBA)

The quarterly financial ratios exhibit distinct trends over the examined periods, indicating fluctuations in liquidity positions.

Current Ratio

The current ratio initially shows moderate stability around values of approximately 1.3 to 1.4 during late 2013 and early 2014. A notable peak occurs in November 2014 where the ratio sharply increases to 2.36, suggesting a significant rise in current assets relative to current liabilities. However, following this peak, the ratio declines and fluctuates around values close to 1.2 to 1.5 until mid-2017. From mid-2017 onwards, a consistent downward trend is observable, with the current ratio decreasing steadily to values below 0.7 by mid-2020, indicating a constriction in liquidity and potentially tighter short-term funding capacity.

Quick Ratio

The quick ratio mirrors the general direction of the current ratio but at lower levels, reflecting the exclusion of inventory from liquid assets. Initially, it rises from 0.42 in late 2013 to a significant peak of 1.66 in November 2014, coinciding with the current ratio peak, and signaling strong immediate liquidity at that time. Thereafter, it remains relatively stable up to late 2016, oscillating between 0.56 and 0.99. From early 2017, the quick ratio demonstrates a sustained decline, reaching values in the range of 0.28–0.34 by mid-2020, indicating a reduction in highly liquid assets relative to current liabilities.

Cash Ratio

The cash ratio, representing the most liquid segment of assets, starts quite low at 0.11 in late 2013 but shows a marked increase peaking at 1.3 in November 2014, paralleling the spikes in the other liquidity ratios. Post peak, values decrease and fluctuate around intermediate levels (0.15 to 0.67) until early 2017. Subsequently, the cash ratio declines sharply to values near 0.03 by mid-2020, suggesting that the company holds minimal cash and cash equivalents relative to current liabilities in recent periods.

Overall, the liquidity ratios reveal a pattern of a strong liquidity position around late 2014, followed by a gradual and sustained weakening over subsequent years through mid-2020. The decline across all three ratios may indicate increasing pressure on short-term financial flexibility or a strategic shift in asset structure, emphasizing lower liquid asset holdings relative to current obligations.

Current Assets

The current assets exhibit a fluctuating trend over the observed periods. Initially, values remain relatively stable between approximately 11,700 and 12,200 million USD through the first four quarters. A significant surge occurs in the fifth quarter, with current assets increasing sharply to over 23,000 million USD, nearly doubling the previous figures. Following this peak, current assets decline and oscillate between roughly 19,000 and 21,000 million USD for several subsequent quarters. Another notable increase is observed around the twelfth to fifteenth quarters, reaching peak levels near 26,600 to 28,100 million USD, before declining again towards the latest quarters, settling around 18,300 million USD. This variability suggests periodic shifts in liquidity or asset management strategies.

Current Liabilities

Current liabilities start below 9,000 million USD and remain under 10,000 million USD for the initial four quarters. An abrupt escalation begins in the fifth quarter, coinciding with the rise in current assets, as liabilities surge dramatically to exceed 16,000 million USD, and subsequently stabilize within the 16,000 to 18,000 million USD range for several quarters. From approximately the sixteenth quarter onward, liabilities exhibit an upward trend, consistently increasing to peak near 29,000 million USD. Such increases imply growing short-term obligations or expanded operations requiring increased payables or accruals.

Current Ratio

The current ratio, representing liquidity, shows considerable volatility aligned with fluctuations in assets and liabilities. Starting above 1.3, it remains stable near 1.4 in the early quarters, then jumps to an elevated level of around 2.36 at the fifth quarter, reflecting the disproportionate rise in current assets compared to liabilities. Subsequently, liquidity tightens, with the ratio dropping below 1.3 and fluctuating marginally above or below this threshold. From about the fifteenth quarter, the current ratio trends downward persistently, falling below 1.0 by the seventeenth quarter and reaching a low near 0.66 in the later periods. This decreasing ratio indicates the company’s current liabilities consistently surpass current assets, implying reduced short-term liquidity and potentially greater reliance on external financing or tighter working capital management.

Overall Trends and Insights

The analysis reveals periods of marked increases in both current assets and liabilities, often contemporaneous but with liabilities rising at a faster rate in recent quarters. The current ratio’s decline to well below 1.0 suggests weakening liquidity positions over time. Such patterns may reflect strategic shifts, including increased operational scale, financing decisions, or changes in working capital components. Monitoring these trends is crucial for assessing the company’s ability to meet short-term obligations and maintain financial stability.

The analyzed financial data reveals significant fluctuations in liquidity over the observed periods. The total quick assets show variability with notable peaks and troughs. Initially, there was a steady increase in quick assets from November 2013 through August 2014, culminating in a marked peak in November 2014. Following this, the quick assets experienced a decline until February 2017, when another surge occurred, reaching high levels through May 2017. Subsequent periods saw a general downward trend with occasional minor recoveries, ending with a decrease by May 2020 compared to earlier highs.

Current liabilities presented an overall increasing trajectory over the same timeframe, albeit with some volatility. After a relatively stable start, liabilities spiked dramatically in early 2015 and remained elevated through that year. The liabilities fluctuated thereafter but continued on an upward trend, reaching some of the highest levels in the later periods, specifically between 2018 and 2020.

The quick ratio, illustrating immediate liquidity relative to current liabilities, exhibited a sharp rise at the end of 2014, corresponding to the peak in quick assets. This ratio then declined consistently with minor temporary rebounds until the end of 2016, when it again approached close to 1.0, suggesting improved short-term financial stability. However, from early 2017 onwards, the quick ratio steadily decreased, falling below 0.3 by the end of the sample period, indicating diminished liquidity buffer against current liabilities and potentially increased short-term financial risk.

Liquidity Trends

Quick assets increased sharply in late 2014 and early 2017, but otherwise showed variability and trend downward post-2017.

Current liabilities generally increased over time with pronounced spikes in early 2015 and consistently high levels from 2018 onward.

The quick ratio rose above 1.5 briefly in late 2014, suggesting strong liquidity temporarily, but declined steadily after 2017 to below 0.3 by mid-2020.

Financial Stability Insights

The intermittent peaks in quick assets likely provided temporary relief to liquidity pressures caused by elevated current liabilities.

The sustained increase in current liabilities could signify growing short-term obligations that may stress cash resources if not matched by liquid assets.

The weakening quick ratio in recent years points toward a potential decline in the company's ability to cover short-term liabilities without relying on inventory or other less liquid assets.

The analysis of the quarterly financial data reveals several notable trends in liquidity and working capital management.

Total cash assets

Total cash assets exhibited significant fluctuations over the periods analyzed. Early on, there was an upward trend from 969 million USD in late 2013 to a peak of 12,861 million USD by November 2014, indicating a substantial build-up of cash reserves. However, this peak was followed by volatility and a general decline, with cash levels decreasing sharply in subsequent quarters, dropping to lower levels around 700-1,800 million USD between 2017 and 2020. This volatility suggests periods of cash utilization or investment activities impacting cash holdings.

Current liabilities

Current liabilities showed an overall upward trajectory throughout the timeframe. Beginning at 8,821 million USD in late 2013, current liabilities increased steadily, reaching over 29,000 million USD by early 2020. This represents a more than threefold increase, indicating expanded short-term obligations. The persistent increase may reflect growth in operational scale, increased short-term borrowing, or accrued expenses.

Cash ratio

The cash ratio experienced marked changes, initially rising from 0.11 to a peak of 1.3 in November 2014, coinciding with the rise in cash assets. This suggests a period of strong liquidity where cash assets substantially covered current liabilities. Following this peak, the ratio declined sharply and remained generally low, fluctuating between 0.03 and 0.67 in subsequent periods. By the latter part of the data, the cash ratio stabilized at approximately 0.03-0.04, indicating a low level of cash relative to current liabilities, which reflects tighter liquidity or a shift towards managing liquidity with other current assets.

In summary, the data illustrates a company that experienced a significant increase in cash and liquidity during the first half of the period, followed by a reduction in cash holdings paired with rising current liabilities. The low cash ratio in recent quarters may indicate increased reliance on other short-term assets or financing methods to support operational needs. This pattern suggests a dynamic liquidity management approach in response to changing operational requirements or strategic initiatives.