Dollar General Corporation (DG)

Based on the provided data, the liquidity ratios of Dollar General Corporation have been fluctuating over the time period under review.

1. Current Ratio: The current ratio measures the company's ability to cover its short-term obligations with its current assets. Dollar General Corporation's current ratio has generally shown an increasing trend over the period from April 29, 2022, to January 31, 2025. The ratio improved from 0.97 in April 2022 to 1.19 in January 2025. This suggests that the company has been more capable of meeting its short-term liabilities with its current assets over time.

2. Quick Ratio: 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 Corporation's quick ratio has been more volatile compared to the current ratio. It ranged from a low of 0.04 in July 2022 to a high of 0.17 in July 2024. The ratio shows fluctuations but generally increased towards the end of the reporting period, indicating an improvement in the company's ability to meet its short-term obligations without relying on inventory.

3. Cash Ratio: The cash ratio is the most conservative liquidity metric as it only considers cash and cash equivalents in relation to current liabilities. Dollar General Corporation's cash ratio also varied during the period, with the lowest being 0.04 in multiple periods and the highest at 0.17 in July 2024. Notably, the cash ratio showed a significant increase towards the latter part of the period, reaching 0.14 in January 2025. This implies that the company had a higher proportion of cash to cover its short-term liabilities by the end of the period.

In conclusion, Dollar General Corporation's liquidity ratios have shown mixed performance over the reporting period, with improvements in the current ratio and cash ratio towards the end of the timeline. The company's ability to meet short-term obligations seems to have strengthened, albeit with some fluctuations in the quick ratio. Monitoring these ratios will be crucial to assess the company's liquidity position and its ability to handle short-term financial obligations effectively.

---

See also:

Dollar General Corporation Liquidity Ratios (Quarterly Data)

---

Additional liquidity measure

The cash conversion cycle for Dollar General Corporation has exhibited fluctuations over the reported periods, ranging from a low of 29.08 days to a high of 95.46 days. This metric reflects the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

A shorter cash conversion cycle typically signifies efficient management of working capital and a quicker turnaround of inventory into sales, which can positively impact the company's liquidity and overall financial health. Conversely, a longer cash conversion cycle may indicate issues with inventory management, sluggish sales, or delays in collecting accounts receivable, which could strain the company's cash flow and profitability.

Analyzing the trend of Dollar General Corporation's cash conversion cycle over time can provide insights into its operational efficiency and financial performance. For example, periods of decreasing cycle times may suggest improvements in inventory turnover and sales velocity, while increasing cycle times may raise concerns about working capital management and operational effectiveness. It is important for stakeholders to monitor fluctuations in the cash conversion cycle closely to assess the company's ability to effectively manage its cash flow and optimize its working capital position.