Dollar Tree Inc (DLTR)
Liquidity ratios
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | |
|---|---|---|---|---|---|
| Current ratio | 1.06 | 1.31 | 1.31 | 1.51 | 1.51 |
| Quick ratio | 0.15 | 0.15 | 0.15 | 0.15 | 0.15 |
| Cash ratio | 0.15 | 0.15 | 0.15 | 0.15 | 0.15 |
Dollar Tree Inc's liquidity ratios indicate its ability to meet its short-term obligations.
1. Current Ratio: The current ratio has been relatively stable over the years, ranging from 1.06 to 1.51. This suggests that the company has enough current assets to cover its current liabilities, with a current ratio greater than 1 indicating a healthy liquidity position. However, the decreasing trend from 2023 to 2025 may raise concerns about the company's ability to meet short-term obligations in the future.
2. Quick Ratio: The quick ratio, which measures the company's ability to meet short-term obligations without relying on inventory, has remained constant at 0.15 across the years. This indicates that Dollar Tree Inc may have limited ability to cover its immediate liabilities with its most liquid assets.
3. Cash Ratio: The cash ratio, which assesses the firm's ability to cover its current liabilities with cash and cash equivalents, has also been steady at 0.15. This implies that Dollar Tree Inc's cash reserves may be insufficient to cover its short-term obligations entirely.
In conclusion, Dollar Tree Inc's liquidity ratios, while indicating a satisfactory ability to meet short-term commitments, show some areas for improvement, particularly in terms of increasing cash reserves to enhance liquidity further.
See also:
Additional liquidity measure
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 86.43 | 57.40 | 87.73 | 102.55 | 72.36 |
The cash conversion cycle of Dollar Tree Inc has shown variability over the past few years. In January 2023, the cash conversion cycle was 72.36 days, indicating that it took approximately 72 days for the company to convert its investments in inventory and accounts receivable into cash. By January 2024, the cash conversion cycle increased to 87.73 days, suggesting a longer period for the company to realize cash from its operations.
However, by February 2024, there was a significant improvement in the cash conversion cycle, with a notable decrease to 57.40 days. This improvement may indicate more efficient management of inventory and receivables, leading to a shorter cash conversion cycle and faster cash generation.
In January 2025, the cash conversion cycle was 86.43 days, slightly higher compared to February 2024 but still lower than January 2024. Maintaining a favorable cash conversion cycle is essential for a company's liquidity and financial health, as it can impact working capital management and overall operational efficiency.