Nordstrom Inc (JWN)

Nordstrom Inc's current ratio has shown a positive trend over the past few years, indicating an improvement in its short-term liquidity position. The current ratio stood at 1.19 as of January 31, 2025, demonstrating that the company had more than enough current assets to cover its current liabilities.

On the other hand, Nordstrom's quick ratio has been fluctuating over the same period, reflecting variations in the company's ability to meet its short-term obligations using its most liquid assets. The quick ratio ranged from a low of 0.08 on October 31, 2022, to a high of 0.34 on January 31, 2025.

Lastly, the cash ratio, which measures the company's ability to cover its current liabilities with its most liquid asset, cash and cash equivalents, has also fluctuated over time. Nordstrom's cash ratio ranged from 0.08 on October 29, 2022, to 0.34 on January 31, 2025.

Overall, while the current ratio indicates a healthy liquidity position for Nordstrom Inc, the fluctuating quick ratio and cash ratio suggest some variability in the company's ability to quickly meet its short-term obligations using its most liquid assets. It would be important for Nordstrom to continue monitoring and managing its liquidity effectively to ensure stability in its short-term financial position.

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Additional liquidity measure

The cash conversion cycle is an important metric for assessing the efficiency of Nordstrom Inc in managing its cash flows related to its operations. By analyzing the provided data points, we can observe fluctuations in the cash conversion cycle over various reporting periods.

The cash conversion cycle represents the number of days it takes for the company to convert its investments in inventory and other resources into cash from sales to customers. A shorter cash conversion cycle indicates that Nordstrom Inc is able to quickly generate cash from its operations, while a longer cycle may suggest inefficiencies in managing its working capital.

From the data provided, we can see that Nordstrom Inc experienced fluctuations in its cash conversion cycle over the periods mentioned. For example, the cycle ranged from a low of 32.20 days in April 29, 2023, to a high of 141.29 days in October 31, 2023. These fluctuations can be attributed to various factors such as changes in inventory management, sales cycles, and payment terms with suppliers and customers.

Analyzing the trend over time, it is important to note that a decreasing trend in the cash conversion cycle may indicate improvements in working capital management and efficiency in converting investments into cash. On the other hand, an increasing trend could signify potential challenges in managing working capital effectively.

Overall, a thorough analysis and understanding of Nordstrom Inc's cash conversion cycle can provide valuable insights into its operational efficiency and financial performance. It is essential for the company to monitor and manage its cash conversion cycle effectively to optimize its working capital and sustain healthy cash flows.