BJs Wholesale Club Holdings Inc (BJ)

The liquidity ratios of BJs Wholesale Club Holdings Inc, as shown in the table, reflect the company's ability to meet its short-term obligations and cover immediate financial needs.

The current ratio, which measures the company's ability to pay off current liabilities with current assets, has been fluctuating over the past five years, ranging from 0.67 to 0.76. The current ratio has generally been below 1, indicating that the company may have some difficulty in meeting its short-term obligations with its current assets alone.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. BJs Wholesale Club Holdings Inc has maintained a consistent quick ratio of around 0.11 over the past five years. This suggests that the company may have limited ability to cover its immediate liabilities with its most liquid assets.

The cash ratio, which is the most conservative liquidity ratio, measures the company's ability to cover current liabilities with only cash and cash equivalents. BJs Wholesale Club Holdings Inc has had a cash ratio ranging from 0.01 to 0.02 over the past five years. This indicates that the company has a very low level of cash reserves relative to its current liabilities.

Overall, the liquidity ratios suggest that BJs Wholesale Club Holdings Inc may have some challenges in meeting its short-term financial obligations with its current asset base. Investors and stakeholders may want to monitor the company's liquidity position closely to ensure its financial health and stability.

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Additional liquidity measure

The cash conversion cycle of BJs Wholesale Club Holdings Inc has been fluctuating over the past five years. In the most recent fiscal year, the company's cash conversion cycle was 10.38 days, indicating that it took BJs Wholesale Club approximately 10.38 days to convert its investments in inventory into cash from sales. This represents an increase compared to the previous year's cycle of 8.74 days.

Looking back over the five-year period, there has been some variability in the cash conversion cycle. In fiscal year 2022, the cycle was at its lowest, standing at 7.32 days, indicating a more efficient management of inventory and cash flow. However, in fiscal year 2020, the cycle was at its highest, reaching 15.72 days, suggesting that BJs Wholesale Club took a longer time to convert its investments into cash during that period.

Overall, a lower cash conversion cycle is generally favorable as it signifies that the company is managing its working capital efficiently. However, fluctuations in the cycle over time may reflect changes in the company's operations, inventory management practices, or sales trends. Investors and analysts may want to further investigate the reasons behind these fluctuations to assess the company's financial performance and operational effectiveness.