American Eagle Outfitters Inc (AEO)

American Eagle Outfitters Inc's liquidity ratios have shown some fluctuations over the years. The current ratio, which indicates the company's ability to meet short-term obligations with its current assets, has remained relatively stable, ranging from 1.43 to 1.61. This suggests that the company has enough current assets to cover its current liabilities.

However, the quick ratio, a more stringent measure of liquidity as it excludes inventory from current assets, has varied more significantly, ranging from 0.33 to 0.79. The lower quick ratio in some periods indicates that American Eagle Outfitters may have relied more on inventory to meet its short-term obligations. Overall, while the quick ratio has improved in recent years, it still remains below 1 in most periods, indicating a potential risk in meeting short-term obligations without relying on inventory.

The cash ratio, which measures the company's ability to cover current liabilities with cash and cash equivalents, has shown a similar trend to the quick ratio, ranging from 0.33 to 0.51. The cash ratio indicates that American Eagle Outfitters may have limited cash on hand relative to its current liabilities, which could pose a challenge in meeting immediate obligations.

In conclusion, American Eagle Outfitters Inc has maintained a stable current ratio, but its quick ratio and cash ratio indicate potential challenges in meeting short-term obligations without relying on inventory or cash equivalents. It may be beneficial for the company to focus on increasing its liquid assets to enhance its liquidity position.

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Additional liquidity measure

Based on the provided data, the cash conversion cycle of American Eagle Outfitters Inc has fluctuated over the years. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash flows from sales.

In January 2023, the company's cash conversion cycle stood at 43.98 days, indicating a relatively efficient conversion of inventory into cash. However, by January 2024, the cash conversion cycle had increased to 72.24 days, suggesting that the company may be taking longer to convert its resources into cash.

The significant increase in the cash conversion cycle by January 2024 could be a concern, as it may indicate issues with inventory management, collection of receivables, or sales efficiency. It is important for the company to address the factors contributing to the prolonged cash conversion cycle to ensure optimal cash flow and liquidity.

By February 2024, the cash conversion cycle had decreased to 43.29 days, showing some improvement compared to the previous period. However, by January 2025, the cycle increased again to 71.73 days, indicating ongoing variability in the company's cash conversion efficiency.

Overall, the fluctuating cash conversion cycle of American Eagle Outfitters Inc suggests the need for close monitoring and potential adjustments in operational processes to enhance cash flow management and overall financial performance.