Dollar General Corporation (DG)

The current ratio measures Dollar General Corporation's ability to meet short-term obligations with its current assets. The trend of the current ratio over the past five years shows fluctuations with a value of 1.19 as of February 2, 2024. A general downward trend is observed from 2019 to 2022, indicating potential challenges in meeting short-term obligations. However, the current ratio improved slightly in 2023, which may suggest better liquidity management. Overall, the current ratio is above 1, which indicates that Dollar General has more current assets than current liabilities.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Dollar General's quick ratio has remained consistently low over the past five years, with a value of 0.10 as of February 2, 2024. This indicates that the company may have difficulty meeting its short-term obligations with its most liquid assets alone, especially in 2022 and 2023. The quick ratio of less than 1 suggests a reliance on inventory to meet short-term obligations.

The cash ratio reflects Dollar General's ability to cover immediate liabilities with its cash and cash equivalents. The trend of the cash ratio over the past five years also shows fluctuations, with a value of 0.08 as of February 2, 2024. The cash ratio has been consistently low, indicating that the company may have limited cash on hand relative to its current liabilities. The increase in the cash ratio in recent years, particularly in 2023 and 2024, may suggest improved liquidity and cash management practices.

In conclusion, Dollar General Corporation's liquidity ratios, particularly the quick ratio and cash ratio, indicate potential liquidity challenges in meeting short-term obligations with readily available assets. The fluctuating trends in these ratios over the past five years highlight the importance of closely monitoring the company's liquidity position and implementing strategies to improve cash flow management.

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See also:

Dollar General Corporation Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Dollar General Corporation has shown fluctuations over the past five years. In February 2024, the company's cash conversion cycle was 35.37 days, slightly higher than the previous year's 35.24 days. This indicates that Dollar General took slightly longer to convert its investments in inventory and other resources into cash during the recent period.

Comparing to previous years, in January 2022, the company's cash conversion cycle was significantly lower at 23.13 days, reflecting a more efficient management of cash flow. The trend continued in January 2021, where Dollar General further improved its cash conversion cycle to 20.73 days, indicating a quicker turnaround of its resources into cash.

However, in January 2020, the cash conversion cycle increased to 27.05 days, suggesting a slight delay in the cash conversion process compared to the two preceding years.

Overall, Dollar General Corporation has experienced fluctuations in its cash conversion cycle over the past five years, with some periods showing more efficient cash management than others. Understanding and monitoring these trends can provide insights into the company's operational efficiency and financial performance.