Boot Barn Holdings Inc (BOOT)

Boot Barn Holdings Inc's liquidity ratios depict its ability to meet its short-term obligations. The current ratio has shown a fluctuating trend over the years, starting at 1.69 in March 2021, decreasing to 1.61 in March 2022, and then increasing to 1.79 in March 2023 before seeing significant improvements to 2.33 in March 2024 and 2.45 in March 2025. This indicates that the company's current assets are now more than double its current liabilities.

In contrast, the quick ratio, which excludes inventory from current assets, has been much lower and unstable. It started at a very low 0.39 in March 2021, decreased significantly to 0.09 in March 2022, and remained low at 0.08 in March 2023, before improving to 0.31 in March 2024 and decreasing slightly to 0.23 in March 2025. This suggests that the company may have difficulty meeting its short-term obligations without relying on selling inventory.

The cash ratio, which further refines the quick ratio by considering only cash and cash equivalents, shows a similar pattern. It began at 0.33 in March 2021, dropped sharply to 0.06 in March 2022, stayed low at 0.05 in March 2023, before rebounding to 0.24 in March 2024, and then slightly lower at 0.20 in March 2025. This indicates the company's ability to cover its current liabilities using only cash and cash equivalents has improved over time but still remains relatively low.

Overall, the trend in Boot Barn Holdings Inc's liquidity ratios demonstrates a strengthening financial position in terms of meeting short-term obligations, with notable improvements in current and cash ratios, though the quick ratio remains a concern. Investors and stakeholders may monitor these ratios closely for continued stability and improvement in the company's ability to finance its operations efficiently.

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Additional liquidity measure

The cash conversion cycle of Boot Barn Holdings Inc has shown a fluctuating trend over the past five years, increasing from 109.56 days as of March 31, 2021, to 189.26 days as of March 31, 2025. This indicates a lengthening in the time it takes for the company to convert its investments in inventory into cash receipts from sales.

The upward trend in the cash conversion cycle suggests that Boot Barn Holdings Inc may be facing challenges in managing its working capital efficiently. A longer cash conversion cycle can tie up cash resources, impacting liquidity and potentially increasing the company's reliance on external financing.

The company may need to assess its inventory management practices, sales policies, and accounts receivable collection processes to streamline operations and reduce the time it takes to convert inventory into cash effectively. By improving these aspects, Boot Barn Holdings Inc could enhance its working capital efficiency and potentially strengthen its financial position.