Capri Holdings Ltd (CPRI)

Capri Holdings Ltd's liquidity ratios show mixed trends over the years. The current ratio, a measure of the company's ability to cover short-term liabilities with current assets, has experienced fluctuations. It increased from 0.95 in March 31, 2021, to 1.21 in March 31, 2022, and further to 1.29 in March 31, 2023, indicating improved short-term liquidity. However, the ratio dropped to 0.95 in March 31, 2024, and notably decreased to 0.00 in March 31, 2025, possibly raising concerns about the company's ability to meet short-term obligations in the most recent period.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventories from current assets, also showed a similar pattern. It increased from 0.37 in March 31, 2021, to 0.39 in March 31, 2022, and further to 0.44 in March 31, 2023. However, it decreased to 0.34 in March 31, 2024, and significantly dropped to 0.00 in March 31, 2025, suggesting potential challenges in meeting immediate obligations without relying on inventory.

The cash ratio, indicating the proportion of current liabilities that could be covered by cash and cash equivalents, exhibited variations. It decreased from 0.14 in March 31, 2021, to 0.11 in March 31, 2022, before increasing to 0.17 in March 31, 2023. However, similar to the other ratios, it declined to 0.12 in March 31, 2024, and fell to 0.00 in March 31, 2025, potentially highlighting liquidity constraints.

Overall, the declining trends in the liquidity ratios, particularly in the most recent period, suggest potential liquidity challenges for Capri Holdings Ltd, which may necessitate closer monitoring and strategic actions to ensure adequate short-term liquidity and ability to meet financial obligations.

---

Additional liquidity measure

The cash conversion cycle of Capri Holdings Ltd has fluctuated over the past few years. As of March 31, 2021, the company's cash conversion cycle stood at 89.42 days, indicating that it takes approximately 89.42 days for the company to convert its investments in inventory and other resources into cash from sales.

There was a significant increase in the cash conversion cycle in the following years, with the cycle reaching 131.40 days as of March 31, 2022, and further increasing to 137.37 days by March 31, 2023. This trend suggests that Capri Holdings may be taking longer to convert its investments to cash, potentially causing a strain on its liquidity and working capital management.

However, there was a decrease in the cash conversion cycle as of March 31, 2024, where it stood at 128.63 days. This reduction could indicate improvements in inventory management or collection processes, resulting in a shorter time frame for the company to convert its resources into cash.

It is worth noting that as of March 31, 2025, the cash conversion cycle is reported as 0.00 days. While this data point may seem unusual and would require further investigation, it could potentially indicate a significant improvement in Capri Holdings' working capital efficiency, with the company managing to streamline its operations and quickly convert investments to cash.

Overall, the analysis of Capri Holdings Ltd's cash conversion cycle suggests fluctuations in the efficiency of its working capital management over the years, highlighting the importance of monitoring and optimizing the company's liquidity and operational processes.