Analysis of Liquidity Ratios
Quarterly Data
Liquidity ratios measure the company ability to meet its short-term obligations.
Liquidity Ratios (Summary)
Walgreens Boots Alliance Inc., liquidity ratios (quarterly data)
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30).
The analysis of liquidity ratios over the series of quarters reveals several important trends and raises considerations regarding the company's short-term financial health and operational efficiency.
- Current Ratio
- The current ratio exhibited a general declining trend from 2.36 in November 2014 down to around 0.69 by May 2020. Early in the period, the ratio fluctuated but remained above 1.0, indicating sufficient current assets to cover current liabilities. However, from early 2017 onwards, the ratio dropped below 1.0 consistently, which may suggest a tightening in liquidity and a potential risk in meeting short-term obligations without additional financing or asset liquidation.
- Quick Ratio
- The quick ratio also showed a downward trend, starting at 1.66 at the beginning of the series and decreasing to approximately 0.29 by the last quarter observed. The ratio fell rapidly between November 2014 and February 2015 and continued to decline gradually despite some fluctuations. This drop reflects a contraction in very liquid assets (excluding inventory), indicating reduced immediate liquidity, which may impact the firm's ability to quickly settle liabilities without relying on inventory sales.
- Cash Ratio
- The cash ratio, which is the most stringent liquidity measure including only cash and cash equivalents, experienced the steepest decline, falling from 1.3 in November 2014 down to 0.03 by mid-2020. This significant reduction illustrates that the company’s cash reserves relative to current liabilities have drastically decreased, pointing to a potential vulnerability in absorbing short-term shocks and obligations. Such a low cash ratio suggests reliance on other current assets or external financing to support operating activities.
Overall, the data highlights a persistent weakening in all liquidity measures over the period analyzed. The declining current and quick ratios imply that the company's short-term asset base relative to liabilities has decreased, while the cash ratio indicates a substantial reduction in liquid cash available. These trends warrant further investigation into the reasons behind the decline, such as increased liabilities, reduced cash holdings, changes in working capital management, or strategic shifts in asset allocation. Managing liquidity risk should be a priority to ensure continued financial stability and operational flexibility.
Current Ratio
Walgreens Boots Alliance Inc., current ratio calculation (quarterly data)
| May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Current assets | 18,326) | 18,909) | 19,604) | 18,700) | 19,021) | 19,851) | 20,083) | 17,846) | 19,988) | 20,358) | 19,681) | 19,753) | 28,152) | 27,509) | 26,668) | 25,883) | 19,713) | 20,378) | 20,231) | 19,657) | 21,029) | 20,715) | 23,280) | |||||||
| Current liabilities | 26,649) | 28,662) | 29,494) | 25,769) | 25,060) | 25,303) | 25,099) | 21,667) | 21,482) | 22,559) | 20,517) | 18,547) | 21,713) | 17,678) | 17,729) | 17,013) | 15,811) | 16,272) | 16,874) | 16,557) | 16,157) | 16,690) | 9,877) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Current ratio1 | 0.69 | 0.66 | 0.66 | 0.73 | 0.76 | 0.78 | 0.80 | 0.82 | 0.93 | 0.90 | 0.96 | 1.07 | 1.30 | 1.56 | 1.50 | 1.52 | 1.25 | 1.25 | 1.20 | 1.19 | 1.30 | 1.24 | 2.36 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Current Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30).
1 Q3 2020 Calculation
Current ratio = Current assets ÷ Current liabilities
= 18,326 ÷ 26,649 = 0.69
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals distinct trends in the company's liquidity over the observed periods. The focus is on the current assets, current liabilities, and the resulting current ratio, which serves as an indicator of short-term financial health and the ability to cover current obligations.
- Current Assets
- Current assets exhibited fluctuations throughout the period. Initially, the values remained around the 20,000 million US dollar mark with some variation, peaking notably in August 2016 at approximately 25,883 million US dollars. Following this peak, there was a general decline with occasional minor recoveries, culminating in a figure near 18,326 million US dollars by May 2020. This overall downward trend suggests a reduction in liquid assets available in the short term.
- Current Liabilities
- Current liabilities demonstrated a rising trajectory over the quarters. Starting from about 9,877 million US dollars in November 2014, there was a significant increase peaking at roughly 29,494 million US dollars in February 2020. Such an increase in liabilities indicates growing short-term obligations, which could exert pressure on liquidity if not matched by an increase in assets.
- Current Ratio
- The current ratio, calculated as current assets divided by current liabilities, began at a relatively strong position of 2.36 in November 2014, implying that current assets were more than twice the current liabilities. However, there was a marked deterioration over time, with the ratio generally declining and falling below 1.0 from November 2017 onward. The lowest values hovered around 0.66 in both February and May 2020, indicating that current liabilities increasingly exceeded current assets, which may signal liquidity challenges and potential difficulty in meeting short-term obligations.
Overall, the financial data points to a weakening liquidity position across the timeline, attributable primarily to a combination of declining current assets and rising current liabilities. The downward trend in the current ratio is of concern, as it suggests the company’s capacity to cover its short-term liabilities with short-term assets has diminished significantly by the end of the analysis period.
Quick Ratio
Walgreens Boots Alliance Inc., quick ratio calculation (quarterly data)
| May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | 768) | 792) | 811) | 1,023) | 839) | 818) | 980) | 785) | 1,818) | 1,749) | 1,830) | 3,301) | 12,253) | 11,822) | 9,598) | 9,807) | 3,291) | 3,586) | 2,570) | 3,000) | 4,449) | 3,005) | 12,861) | |||||||
| Accounts receivable, net | 6,982) | 7,572) | 7,435) | 7,226) | 7,239) | 7,828) | 7,144) | 6,573) | 7,159) | 7,281) | 6,858) | 6,528) | 6,339) | 5,674) | 6,138) | 6,260) | 6,508) | 6,733) | 6,821) | 6,849) | 6,899) | 7,017) | 3,579) | |||||||
| Total quick assets | 7,750) | 8,364) | 8,246) | 8,249) | 8,078) | 8,646) | 8,124) | 7,358) | 8,977) | 9,030) | 8,688) | 9,829) | 18,592) | 17,496) | 15,736) | 16,067) | 9,799) | 10,319) | 9,391) | 9,849) | 11,348) | 10,022) | 16,440) | |||||||
| Current liabilities | 26,649) | 28,662) | 29,494) | 25,769) | 25,060) | 25,303) | 25,099) | 21,667) | 21,482) | 22,559) | 20,517) | 18,547) | 21,713) | 17,678) | 17,729) | 17,013) | 15,811) | 16,272) | 16,874) | 16,557) | 16,157) | 16,690) | 9,877) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Quick ratio1 | 0.29 | 0.29 | 0.28 | 0.32 | 0.32 | 0.34 | 0.32 | 0.34 | 0.42 | 0.40 | 0.42 | 0.53 | 0.86 | 0.99 | 0.89 | 0.94 | 0.62 | 0.63 | 0.56 | 0.59 | 0.70 | 0.60 | 1.66 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Quick Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30).
1 Q3 2020 Calculation
Quick ratio = Total quick assets ÷ Current liabilities
= 7,750 ÷ 26,649 = 0.29
2 Click competitor name to see calculations.
The analysis of the quarterly financial data reveals certain notable trends in liquidity and short-term financial position as observed through total quick assets, current liabilities, and the quick ratio over the given periods.
- Total Quick Assets
-
The total quick assets show considerable fluctuations throughout the periods. Initially, there is a decline from US$16,440 million in November 2014 to a low of around US$8,688 million in November 2017. Following this, the quick assets maintain a generally stable but lower range, fluctuating between approximately US$7,358 million and US$8,646 million from 2018 to mid-2020. This decline and subsequent stabilization at a lower level indicate a reduction in highly liquid assets available to meet immediate liabilities over the timeframe analyzed.
- Current Liabilities
-
Current liabilities exhibit a persistent upward trend over the periods. Starting at US$9,877 million in November 2014, liabilities increase significantly, with occasional variations, reaching a peak near US$29,494 million in February 2020, before a slight reduction to US$26,649 million by May 2020. This growing trend in current liabilities suggests increasing short-term obligations the company must address, which may affect its liquidity position.
- Quick Ratio
-
The quick ratio, which measures the ability to meet short-term liabilities without relying on inventory sales, declines sharply from 1.66 in November 2014 to a low around 0.28-0.29 in early 2020. Initially, the company had a strong liquidity buffer, but over the periods, the ratio steadily diminishes, remaining below 1.0 for most quarters from early 2015 onward. This indicates that quick assets consistently fell short of covering current liabilities, reflecting a weakening liquidity position and potential challenges in meeting immediate financial obligations.
In summary, the data highlights a significant and sustained deterioration in the company’s liquidity position, characterized by decreasing quick assets, rising current liabilities, and a consistently low quick ratio in recent periods. These trends suggest increased liquidity risk and potential pressure on the company's ability to cover short-term liabilities promptly through liquid assets.
Cash Ratio
Walgreens Boots Alliance Inc., cash ratio calculation (quarterly data)
| May 31, 2020 | Feb 29, 2020 | Nov 30, 2019 | Aug 31, 2019 | May 31, 2019 | Feb 28, 2019 | Nov 30, 2018 | Aug 31, 2018 | May 31, 2018 | Feb 28, 2018 | Nov 30, 2017 | Aug 31, 2017 | May 31, 2017 | Feb 28, 2017 | Nov 30, 2016 | Aug 31, 2016 | May 31, 2016 | Feb 29, 2016 | Nov 30, 2015 | Aug 31, 2015 | May 31, 2015 | Feb 28, 2015 | Nov 30, 2014 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | ||||||||||||||||||||||||||||||
| Cash and cash equivalents | 768) | 792) | 811) | 1,023) | 839) | 818) | 980) | 785) | 1,818) | 1,749) | 1,830) | 3,301) | 12,253) | 11,822) | 9,598) | 9,807) | 3,291) | 3,586) | 2,570) | 3,000) | 4,449) | 3,005) | 12,861) | |||||||
| Total cash assets | 768) | 792) | 811) | 1,023) | 839) | 818) | 980) | 785) | 1,818) | 1,749) | 1,830) | 3,301) | 12,253) | 11,822) | 9,598) | 9,807) | 3,291) | 3,586) | 2,570) | 3,000) | 4,449) | 3,005) | 12,861) | |||||||
| Current liabilities | 26,649) | 28,662) | 29,494) | 25,769) | 25,060) | 25,303) | 25,099) | 21,667) | 21,482) | 22,559) | 20,517) | 18,547) | 21,713) | 17,678) | 17,729) | 17,013) | 15,811) | 16,272) | 16,874) | 16,557) | 16,157) | 16,690) | 9,877) | |||||||
| Liquidity Ratio | ||||||||||||||||||||||||||||||
| Cash ratio1 | 0.03 | 0.03 | 0.03 | 0.04 | 0.03 | 0.03 | 0.04 | 0.04 | 0.08 | 0.08 | 0.09 | 0.18 | 0.56 | 0.67 | 0.54 | 0.58 | 0.21 | 0.22 | 0.15 | 0.18 | 0.28 | 0.18 | 1.30 | |||||||
| Benchmarks | ||||||||||||||||||||||||||||||
| Cash Ratio, Competitors2 | ||||||||||||||||||||||||||||||
| Costco Wholesale Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Target Corp. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
| Walmart Inc. | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | |||||||
Based on: 10-Q (reporting date: 2020-05-31), 10-Q (reporting date: 2020-02-29), 10-Q (reporting date: 2019-11-30), 10-K (reporting date: 2019-08-31), 10-Q (reporting date: 2019-05-31), 10-Q (reporting date: 2019-02-28), 10-Q (reporting date: 2018-11-30), 10-K (reporting date: 2018-08-31), 10-Q (reporting date: 2018-05-31), 10-Q (reporting date: 2018-02-28), 10-Q (reporting date: 2017-11-30), 10-K (reporting date: 2017-08-31), 10-Q (reporting date: 2017-05-31), 10-Q (reporting date: 2017-02-28), 10-Q (reporting date: 2016-11-30), 10-K (reporting date: 2016-08-31), 10-Q (reporting date: 2016-05-31), 10-Q (reporting date: 2016-02-29), 10-Q (reporting date: 2015-11-30), 10-K (reporting date: 2015-08-31), 10-Q (reporting date: 2015-05-31), 10-Q (reporting date: 2015-02-28), 10-Q (reporting date: 2014-11-30).
1 Q3 2020 Calculation
Cash ratio = Total cash assets ÷ Current liabilities
= 768 ÷ 26,649 = 0.03
2 Click competitor name to see calculations.
The analysis of the financial data reveals notable trends in the company's liquidity and short-term obligations over the observed periods.
- Total Cash Assets
- The total cash assets display significant fluctuations across the quarterly periods. Initially, cash holdings were relatively high at approximately 12,861 million USD, but they sharply decreased in the following quarters, reaching a low near 1,830 million USD by November 2017. There is evidence of intermittent recovery, such as in August 2016 and early 2017, where cash assets briefly rose above 9,000 million USD and 12,000 million USD respectively. However, the overall trend from 2017 onwards is a decline and stabilization at lower cash levels under 1,000 million USD, ending around 768 million USD by May 2020.
- Current Liabilities
- Current liabilities show a generally increasing trend over the time span analyzed. Starting at 9,877 million USD in late 2014, liabilities increased sharply after early 2015, surpassing 16,000 million USD in multiple periods through 2016 and reaching values above 25,000 million USD repeatedly from early 2019 onward. The highest levels were observed in early 2020, with current liabilities exceeding 29,000 million USD, showing the company has taken on more short-term obligations over time.
- Cash Ratio
- The cash ratio experienced a steep decline following its initial high level of 1.3 at the end of 2014, reflecting a sharp decrease in cash relative to current liabilities. The ratio dropped below 0.3 by early 2015 and remained mostly under 0.6 throughout the rest of the periods. From late 2017 onwards, the cash ratio continuously declined, stabilizing at very low levels near 0.03 to 0.04 from 2018 through to mid-2020. This indicates a reduced ability to cover current liabilities with cash assets alone over time.
In summary, the company's liquidity position as measured by cash assets relative to current liabilities has weakened substantially during the period observed. Despite occasional short-term increases in cash holdings, the persistent increase in current liabilities combined with declining cash reserves has resulted in a low cash ratio. This suggests potential increased reliance on other forms of short-term financing or operational changes that affect cash management.