Dick’s Sporting Goods Inc (DKS)

Dick’s Sporting Goods Inc's liquidity ratios have fluctuated over the past five years. The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has shown a generally increasing trend from 1.16 in 2020 to 1.78 in 2024. This indicates an improvement in the company's liquidity position, as it now has more current assets relative to its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also demonstrates an upward trend from 0.06 in 2020 to 1.00 in 2022, before declining slightly to 0.70 in 2024. This suggests that Dick’s Sporting Goods Inc has been gradually enhancing its ability to meet short-term obligations using only its most liquid assets.

Moreover, the cash ratio, which focuses solely on cash and cash equivalents in relation to current liabilities, has shown variability over the years but generally indicates an adequate level of liquidity. The ratio increased from 0.03 in 2020 to 0.97 in 2022 before dropping to 0.65 in 2024. This suggests that the company has substantially increased its cash reserves relative to current liabilities, although there was a slight decrease in 2024.

Overall, Dick’s Sporting Goods Inc's liquidity ratios point towards an improved ability to meet short-term obligations and manage liquidity effectively, with the current ratio and quick ratio showing positive trends over the years. However, it is important for the company to continue monitoring and maintaining a strong liquidity position to navigate any unforeseen challenges in the future.

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Additional liquidity measure

The cash conversion cycle of Dick's Sporting Goods Inc has varied over the past five years. In the most recent fiscal year ending on February 3, 2024, the cash conversion cycle stood at 50.40 days, which represents the number of days it takes for the company to convert its investments in inventory into cash from sales. Comparing this figure to the previous years, there has been some fluctuation in the efficiency of the company's cash conversion cycle.

In the fiscal year ending January 28, 2023, the cash conversion cycle was 54.98 days, indicating a slightly longer period for the conversion process compared to the latest fiscal year. However, in the fiscal year ending January 29, 2022, the company showed an improvement with a cash conversion cycle of 38.24 days, suggesting a more efficient operation in converting inventory to cash.

The fiscal year ending on January 30, 2021, exhibited a further decrease in the cash conversion cycle to 30.97 days, which was the most efficient performance in this regard over the past five years. On the contrary, the fiscal year ending February 1, 2020, saw a slight increase in the cash conversion cycle to 54.33 days, indicating a less favorable outcome in terms of the time taken to convert inventory investments into cash.

Overall, the trend in Dick's Sporting Goods Inc's cash conversion cycle demonstrates fluctuations in efficiency over the past five years, with varying levels of effectiveness in managing the conversion of inventory investment into cash from sales.