Nordstrom Inc (JWN)

Nordstrom Inc's liquidity ratios reflect its ability to meet its short-term obligations efficiently. The current ratio remained relatively stable around 1.0-1.1 from January 2023 to January 2025, suggesting the company has just enough current assets to cover its current liabilities.

However, the quick ratio and cash ratio show a more concerning trend. The quick ratio decreased from 0.32 in January 2023 to 0.34 in January 2025, indicating a decline in the company's ability to meet its short-term obligations using its most liquid assets. Similarly, the cash ratio decreased over the same period, indicating a smaller proportion of cash and cash equivalents available to cover current liabilities.

Overall, Nordstrom Inc's liquidity position, as indicated by these ratios, raises some red flags regarding its short-term financial health. Management may need to closely monitor and potentially improve liquidity management practices to ensure the company can meet its obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle of Nordstrom Inc has shown fluctuations over the past five years. In January 2023, the cash conversion cycle was 56.29 days, indicating that Nordstrom took approximately 56 days to convert its investments in inventory and other resources back into cash. By January 2025, this metric had increased to 81.73 days, suggesting a slower conversion process.

It is important to note that a longer cash conversion cycle may indicate inefficiencies in managing inventory or collecting receivables, potentially tying up cash resources for longer periods. On the other hand, a shorter cycle reflects greater efficiency in converting investments back into cash.

Overall, Nordstrom's cash conversion cycle has varied over the years, potentially influenced by factors such as seasonality, industry trends, and the company's operational efficiency. Monitoring this metric can provide insights into the company's working capital management and overall financial health.