Home Depot Inc (HD)
Liquidity ratios
| Jan 31, 2025 | Jan 31, 2024 | Jan 28, 2024 | Jan 31, 2023 | Jan 29, 2023 | |
|---|---|---|---|---|---|
| Current ratio | 1.11 | 1.35 | 1.35 | 1.41 | 1.41 |
| Quick ratio | 0.06 | 0.17 | 0.32 | 0.12 | 0.26 |
| Cash ratio | 0.06 | 0.17 | 0.17 | 0.12 | 0.12 |
Home Depot Inc's liquidity ratios, based on the data provided, indicate the company's ability to meet its short-term obligations:
1. Current Ratio:
- The current ratio measures a company's ability to cover its short-term liabilities with its current assets. Home Depot Inc's current ratio has been relatively stable over the years, ranging from 1.11 to 1.41.
- A current ratio above 1 suggests that the company has sufficient current assets to cover its current liabilities. Home Depot's current ratio indicates that it can meet its short-term obligations, although it has decreased slightly over time.
2. Quick Ratio:
- The quick ratio, also known as the acid-test ratio, is a more stringent measure of liquidity as it excludes inventory from current assets. Home Depot Inc's quick ratio has shown some fluctuation, varying from 0.06 to 0.32.
- A quick ratio below 1 may indicate potential liquidity challenges, as it suggests that the company may have difficulty meeting its immediate obligations without relying on inventory. Home Depot's quick ratio suggests a relatively lower level of liquidity compared to the current ratio.
3. Cash Ratio:
- The cash ratio is the most conservative liquidity measure, focusing solely on the company's ability to cover its current liabilities with cash and cash equivalents. Home Depot Inc's cash ratio has ranged from 0.06 to 0.17.
- A higher cash ratio is generally seen as favorable, as it indicates a stronger ability to settle short-term liabilities with highly liquid assets. Home Depot's cash ratio suggests a moderate level of liquidity, with a slight decrease observed over time.
Overall, the liquidity ratios of Home Depot Inc indicate that the company has maintained a reasonable ability to meet its short-term obligations, although there has been some fluctuation in the ratios over the years. A close monitoring of liquidity trends is advisable to ensure continued financial stability and flexibility in managing operational needs.
See also:
Additional liquidity measure
| Jan 31, 2025 | Jan 31, 2024 | Jan 28, 2024 | Jan 31, 2023 | Jan 29, 2023 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 80.59 | 75.28 | 47.21 | 86.82 | 54.59 |
The cash conversion cycle of Home Depot Inc has shown fluctuations over the past few years. In January 2023, the company had a cash conversion cycle of 54.59 days, which increased to 86.82 days by January 31, 2023. However, the cycle improved in the following years, decreasing to 47.21 days by January 28, 2024, and 75.28 days by January 31, 2024. By January 31, 2025, the cycle increased slightly to 80.59 days.
Overall, Home Depot Inc's cash conversion cycle has shown variations, indicating changes in the company's efficiency in converting its investments in inventory and receivables into cash. The company may need to focus on managing its working capital effectively to optimize the cash conversion cycle and enhance liquidity.