Foot Locker Inc (FL)

The liquidity ratios of Foot Locker Inc, specifically the current ratio, quick ratio, and cash ratio, provide insights into the company's ability to meet its short-term obligations.

Starting with the current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, we can see that there has been some fluctuation over the past five years. The current ratio has ranged from 1.36 to 2.00, with the most recent figure being 1.72 as of February 3, 2024. This suggests that Foot Locker has generally maintained a healthy level of current assets relative to current liabilities, providing a cushion for liquidity.

Moving on to the quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, we observe a similar pattern of fluctuation but with lower values compared to the current ratio. The quick ratio has ranged from 0.35 to 1.30 over the past five years, with the most recent figure standing at 0.35 as of February 3, 2024. This indicates that Foot Locker may have challenges meeting its short-term obligations using only its most liquid assets.

Lastly, the cash ratio, which is the most conservative measure of liquidity as it focuses solely on cash and cash equivalents, shows a decreasing trend over the past five years. The cash ratio has declined from 1.23 in 2021 to 0.23 as of February 3, 2024. This downward trend suggests that Foot Locker may have reduced its cash reserves relative to its short-term liabilities, potentially impacting its ability to meet immediate financial obligations without relying on other sources of liquidity.

In conclusion, while the current ratio indicates that Foot Locker has maintained a comfortable level of liquidity over the years, the decreasing trend in the quick ratio and cash ratio warrants further attention. It may be valuable for the company to review its cash management strategies to ensure it can effectively meet its short-term financial commitments in the future.

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Additional liquidity measure

The cash conversion cycle of Foot Locker Inc has shown fluctuations over the past five years. In the most recent fiscal year ending on February 3, 2024, the company's cash conversion cycle was 59.09 days, a slight increase from the previous fiscal year. This suggests that Foot Locker took slightly longer to convert its investments in inventory into cash during this period.

Comparing this to the fiscal year ending on January 29, 2022, where the cash conversion cycle was 35.67 days, we see a significant increase in the time it takes Foot Locker to convert its inventory into cash. This indicates that there was a delay in the company's ability to convert its investments in inventory into cash during this period.

On the contrary, in the fiscal year ending on January 30, 2021, the cash conversion cycle was 32.32 days, showing efficiency in converting inventory into cash. However, in the fiscal year ending on February 1, 2020, the cash conversion cycle was 48.08 days, indicating a longer cash conversion cycle compared to the previous year.

Overall, the trend in Foot Locker's cash conversion cycle has been somewhat erratic, with fluctuations observed over the past five years. It is essential for the company to closely monitor and effectively manage its cash conversion cycle to ensure optimal utilization of resources and liquidity management.