Caleres Inc (CAL)

Based on the liquidity ratios of Caleres Inc over the past five years, we can observe the following trends:

1. Current Ratio:
The current ratio measures a company's ability to pay off its short-term liabilities with its current assets. Caleres Inc's current ratio has fluctuated over the years, ranging from 0.82 to 1.06. A current ratio of less than 1 indicates that the company may have difficulty meeting its short-term obligations. In 2023 and 2022, the current ratio was below 1, signaling potential liquidity concerns. However, the ratio improved in 2024 to 1.06, which suggests the company's ability to cover its short-term liabilities has strengthened.

2. Quick Ratio:
The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity that excludes inventory from current assets. Caleres Inc's quick ratio has also varied, with values ranging from 0.18 to 0.28. A quick ratio below 1 indicates that the company may struggle to meet its immediate payment obligations without relying on inventory sales. In most years, the quick ratio was below 0.3, highlighting the company's limited ability to cover short-term liabilities with its most liquid assets.

3. Cash Ratio:
The cash ratio is the most conservative liquidity measure, focusing solely on a company's ability to cover short-term liabilities with cash and cash equivalents. Caleres Inc's cash ratio has been consistently low over the years, ranging from 0.03 to 0.10. A low cash ratio suggests a limited ability to pay off immediate obligations with cash on hand. The company's cash ratio decreased in 2024 to 0.03, indicating a potential strain on liquidity.

In conclusion, Caleres Inc's liquidity ratios reveal varying levels of liquidity over the past five years. While the current ratio improved in 2024, the quick ratio and cash ratio remained low, indicating potential challenges in meeting short-term liabilities with liquid assets. It is important for the company to closely monitor and manage its liquidity position to ensure financial stability and meet its obligations in a timely manner.

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Additional liquidity measure

Caleres Inc's cash conversion cycle has shown fluctuations over the past five years. The cash conversion cycle measures the time it takes for a company to convert its investments in inventory and other resources into cash inflows from sales. A shorter cash conversion cycle is generally favorable as it signifies quicker cash generation.

In the most recent fiscal year ending on February 3, 2024, Caleres Inc had a cash conversion cycle of 60.03 days, indicating an improvement from the previous year's figure of 64.69 days. This suggests that the company was able to manage its working capital more efficiently, potentially by either reducing the time taken to sell inventory or by collecting receivables more promptly.

Comparing the latest data to figures from prior years, there has been some variability in Caleres Inc's cash conversion cycle. In the years preceding the most recent fiscal year, the company experienced both shorter and longer cash conversion cycles, demonstrating fluctuations in working capital management efficiency.

Overall, while the recent improvement in the cash conversion cycle is a positive sign, it is essential for Caleres Inc to consistently monitor and optimize this metric to ensure efficient utilization of resources and maintain healthy cash flows in the long term.