Home Depot Inc (HD)
Liquidity ratios
| Jan 28, 2024 | Oct 29, 2023 | Jul 30, 2023 | Apr 30, 2023 | Jan 29, 2023 | Oct 30, 2022 | Jul 31, 2022 | May 1, 2022 | Jan 30, 2022 | Oct 31, 2021 | Aug 1, 2021 | May 2, 2021 | Jan 31, 2021 | Nov 1, 2020 | Aug 2, 2020 | May 3, 2020 | Feb 2, 2020 | Nov 3, 2019 | Aug 4, 2019 | May 5, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.35 | 1.30 | 1.31 | 1.27 | 1.41 | 1.39 | 1.18 | 1.11 | 1.01 | 1.13 | 1.06 | 1.10 | 1.23 | 1.36 | 1.30 | 1.17 | 1.08 | 1.08 | 1.10 | 1.04 |
| Quick ratio | 0.32 | 0.25 | 0.27 | 0.22 | 0.26 | 0.26 | 0.18 | 0.09 | 0.20 | 0.32 | 0.17 | 0.24 | 0.47 | 0.58 | 0.58 | 0.37 | 0.12 | 0.11 | 0.14 | 0.10 |
| Cash ratio | 0.17 | 0.09 | 0.12 | 0.05 | 0.12 | 0.10 | 0.05 | 0.09 | 0.08 | 0.19 | 0.17 | 0.24 | 0.34 | 0.58 | 0.58 | 0.37 | 0.12 | 0.11 | 0.14 | 0.10 |
Based on the provided data, we can analyze Home Depot Inc's liquidity ratios over multiple periods. Here is a breakdown of the key liquidity ratios - current ratio, quick ratio, and cash ratio:
1. Current Ratio:
- Home Depot Inc's current ratio has fluctuated over the periods, ranging from 1.01 to 1.41.
- The company's ability to meet its short-term obligations has generally improved over the recent periods, with the current ratio trending upward.
- A current ratio above 1 indicates that the company has more current assets than current liabilities, suggesting a strong position to cover its short-term debts.
2. Quick Ratio:
- Home Depot Inc's quick ratio, also known as the acid-test ratio, has shown variability ranging from 0.09 to 0.58.
- The quick ratio measures the company's ability to meet its short-term obligations with its most liquid assets.
- The fluctuation in the quick ratio indicates changes in the composition of current assets and liabilities over time.
3. Cash Ratio:
- The cash ratio, which is the most stringent liquidity ratio, has also varied significantly for Home Depot Inc, ranging from 0.05 to 0.58.
- This ratio signifies the company's ability to cover its current liabilities with cash and cash equivalents only.
- A higher cash ratio indicates a stronger ability to cover short-term obligations with readily available cash.
In summary, Home Depot Inc's liquidity position has shown some fluctuations in the short-term ability to meet its obligations over the analyzed periods. However, the current ratio generally improved, while the quick ratio and cash ratio displayed more variability. It is essential for the company to maintain a strong liquidity position to ensure stability and financial health in the face of short-term obligations.
See also:
Additional liquidity measure
| Jan 28, 2024 | Oct 29, 2023 | Jul 30, 2023 | Apr 30, 2023 | Jan 29, 2023 | Oct 30, 2022 | Jul 31, 2022 | May 1, 2022 | Jan 30, 2022 | Oct 31, 2021 | Aug 1, 2021 | May 2, 2021 | Jan 31, 2021 | Nov 1, 2020 | Aug 2, 2020 | May 3, 2020 | Feb 2, 2020 | Nov 3, 2019 | Aug 4, 2019 | May 5, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 47.21 | 49.74 | 48.59 | 54.78 | 54.59 | 55.14 | 50.29 | 35.77 | 39.58 | 35.60 | 23.23 | 18.31 | 29.27 | 14.34 | 8.39 | 24.36 | 33.88 | 32.32 | 26.46 | 26.25 |
The cash conversion cycle of Home Depot Inc has shown some fluctuations over the past few quarters. The cycle represents the time taken by the company to convert its investments in inventory into cash received from sales.
In the most recent quarter, as of January 28, 2024, the cash conversion cycle was 47.21 days. This indicates that it took the company approximately 47 days to convert its investments in inventory into cash. This was a slight improvement compared to the previous quarter where the cycle was 49.74 days.
Looking further back, we see that the cycle was relatively stable between May 2021 and October 2023, ranging from around 48 to 55 days. However, there was a notable decrease in the cycle in August 2021 to 18.31 days, indicating the company was able to more efficiently convert its inventory into cash during that period.
Overall, the cash conversion cycle of Home Depot Inc has displayed some variability, but generally, it has been consistent around the range of 40 to 50 days. It is important for the company to monitor and manage its inventory and accounts receivable effectively to keep the cycle at an optimal level, balancing the need for liquidity with efficiency in operations.