American Eagle Outfitters Inc (AEO)

American Eagle Outfitters Inc's liquidity ratios have shown fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has ranged between 1.39 and 1.77. A current ratio above 1 indicates that the company can meet its current liabilities, with a higher ratio suggesting stronger liquidity. American Eagle Outfitters Inc's current ratio has generally been above 1, reflecting its ability to cover short-term obligations.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. American Eagle Outfitters Inc's quick ratio has varied between 0.66 and 1.56 over the past five years. A quick ratio above 1 indicates that the company can pay off its current liabilities without relying on inventory sales. The company's quick ratio has generally been above 1, indicating adequate liquidity despite some fluctuations.

The cash ratio, which measures a company's ability to cover its current liabilities with its cash and cash equivalents, has ranged from 0.33 to 1.37 for American Eagle Outfitters Inc. A higher cash ratio indicates a stronger ability to cover short-term obligations with cash on hand. Despite some variability, the company's cash ratio has generally been above 1, signaling a reasonable level of liquidity.

Overall, American Eagle Outfitters Inc has maintained reasonable liquidity levels over the past five years, as indicated by its current ratio, quick ratio, and cash ratio. The company's ability to cover its short-term obligations and maintain a healthy level of liquidity suggest a solid financial position in terms of short-term solvency.

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Additional liquidity measure

The cash conversion cycle of American Eagle Outfitters Inc has shown some fluctuations over the past five years. In the most recent year, as of February 3, 2024, the company's cash conversion cycle was 43.29 days, indicating the average number of days it takes for the company to convert its investments in inventory and other resources into cash inflows from sales, and then back into cash through collection from customers.

Comparing this to the previous years, we can see that the trend has been relatively stable, with minor fluctuations. In January 2023, the cash conversion cycle was similar at 43.98 days, while in January 2022, it was slightly higher at 46.75 days. This indicates that in the fiscal year ending February 3, 2024, the company improved its efficiency in managing inventory, sales, and collection processes compared to the previous year but still remained at a similar level compared to two years ago.

In contrast, in the fiscal year ending January 30, 2021, the cash conversion cycle was notably lower at 28.65 days, indicating a higher efficiency in managing working capital and turning inventory into cash. Additionally, in January 2020, the cash conversion cycle was even lower at 23.77 days, suggesting the company was able to convert its investments into cash faster during that period.

Overall, American Eagle Outfitters Inc has generally maintained a reasonable level of efficiency in its cash conversion cycle over the past five years, with some fluctuations observed year-on-year. A lower cash conversion cycle typically signifies better liquidity and operational efficiency, while a higher cycle may indicate issues with managing working capital and with inventory turnover and cash collection processes.