Boot Barn Holdings Inc (BOOT)

Boot Barn Holdings Inc's liquidity ratios indicate the company's ability to meet its short-term obligations and cover current liabilities with its current assets.

The current ratio has shown an improving trend over the past five years, with the ratio increasing from 1.23 in 2020 to 2.33 in 2024. This suggests that the company has enhanced its ability to meet short-term obligations using its current assets, such as cash, inventory, and accounts receivable.

However, the quick ratio and cash ratio have been more volatile during the same period. The quick ratio, which excludes inventory from current assets, has fluctuated significantly, with a low of 0.08 in 2023 to a high of 0.39 in 2021. This could indicate fluctuations in the company's ability to cover immediate liabilities with highly liquid assets.

The cash ratio, measuring the company's ability to cover current liabilities with cash and cash equivalents, also demonstrates volatility. The ratio has ranged from 0.05 in 2023 to 0.33 in 2021. A higher cash ratio implies a higher level of liquidity and ability to meet obligations solely with cash on hand.

Overall, while Boot Barn Holdings Inc has improved its current ratio significantly over the years, the fluctuating trends in the quick ratio and cash ratio suggest potential challenges in maintaining high levels of liquidity in the short term. Management may need to monitor and manage the company's liquidity position effectively to ensure it can meet its short-term obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle of Boot Barn Holdings Inc has exhibited fluctuations over the past five years. The cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales to customers.

From March 31, 2020, to March 31, 2021, there was a significant increase in the cash conversion cycle from 98.85 days to 82.52 days. This improvement indicates that the company was able to manage its inventory and accounts receivable more efficiently, resulting in a shorter time between spending on goods and services and receiving cash from customers.

However, the cycle increased in the subsequent years, reaching 120.22 days as of March 31, 2024. This indicates a potential slowdown in the company's ability to convert its investments into cash, possibly due to issues such as slower inventory turnover or longer accounts receivable collection periods.

Overall, the trend in Boot Barn's cash conversion cycle suggests fluctuations in the efficiency of its working capital management over the years, highlighting the importance of monitoring and optimizing operational processes to ensure timely cash flows.