Five Below Inc (FIVE)

Five Below Inc's liquidity ratios have shown some variations over the years.

The current ratio, which indicates the company's ability to cover short-term liabilities with its current assets, has remained relatively stable around 1.7 over the years. This suggests that the company has sufficient current assets to meet its short-term obligations.

On the other hand, the quick ratio, also known as the acid-test ratio, has decreased slightly from 0.66 to 0.70 by January 31, 2025. This ratio excludes inventory from current assets, providing a more stringent measure of liquidity. Although the quick ratio is lower than the current ratio, it still indicates that Five Below Inc has a satisfactory ability to meet its short-term obligations without relying on inventory.

The cash ratio, which is the most stringent liquidity ratio as it only considers cash and cash equivalents, has also shown a slight increase from 0.66 to 0.70 by January 31, 2025. This indicates that the company has a higher proportion of cash to cover its current liabilities.

Overall, the liquidity ratios of Five Below Inc suggest that the company has maintained a strong liquidity position, with a comfortable ability to meet its short-term financial obligations. However, monitoring these ratios over time can provide insights into any potential changes in the company's liquidity position.

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Additional liquidity measure

The cash conversion cycle of Five Below Inc fluctuated during the period under review. Starting at 39.30 days on January 28, 2023, it increased significantly to 97.24 days by January 31, 2023. However, by January 31, 2024, it decreased to 93.36 days, demonstrating better efficiency in managing cash flows. Subsequently, on February 3, 2024, the cycle decreased further to 37.55 days, indicating an improvement in the company's ability to convert investments into cash.

However, by January 31, 2025, the cash conversion cycle increased to 95.38 days, signifying a potential delay in converting inventory into sales and eventually into cash. Overall, the company's cash conversion cycle experienced fluctuations, with periods of both improvement and challenges in efficiently managing working capital throughout the analyzed timeframe.