Burlington Stores Inc (BURL)

The liquidity ratios of Burlington Stores Inc indicate its ability to meet short-term obligations and manage cash effectively.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a decreasing trend from 1.65 on May 2, 2020, to 1.16 on May 4, 2024. Although the ratio has fluctuated over the period, it mostly remained above 1, suggesting the company has had sufficient current assets to cover its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also decreased from 1.11 on May 2, 2020, to 0.48 on February 1, 2025. This indicates a declining trend in the company's ability to quickly meet its short-term liabilities without relying on inventory.

The cash ratio, which shows the proportion of a company's current assets held in cash or cash equivalents, has fluctuated but generally decreased over the period, from 1.10 on May 2, 2020, to 0.44 on February 1, 2025. This suggests a decreasing ability to cover short-term obligations solely with cash on hand.

Overall, while Burlington Stores Inc has maintained current assets to cover short-term liabilities, the decreasing trends in the quick ratio and cash ratio indicate a potential need to manage liquidity more effectively in the future.

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Additional liquidity measure

The cash conversion cycle is a vital metric for evaluating how efficiently a company manages its working capital by measuring the time it takes to convert its inventory into cash.

For Burlington Stores Inc, there have been fluctuations in the cash conversion cycle over the periods listed in the data. The cash conversion cycle went into negative territory multiple times, indicating that Burlington was able to convert its inventory into cash more quickly than it needed to pay off its liabilities during those periods. This is generally a positive sign, as it suggests strong liquidity and efficient working capital management.

However, there were also periods where the cash conversion cycle turned positive, indicating that Burlington took longer to convert its inventory into cash than it needed to pay off its liabilities. This might be a sign of inefficiencies in inventory management or problems with collecting cash from customers.

It's important to note that a longer cash conversion cycle could tie up cash in inventory and accounts receivable, potentially leading to liquidity issues. Conversely, a shorter cycle indicates a more efficient use of working capital.

Overall, Burlington Stores Inc should aim to manage its cash conversion cycle effectively to ensure optimal liquidity and working capital efficiency in order to support sustainable growth and financial health.