Kohls Corp (KSS)

Kohls Corp's liquidity ratios show varying levels of ability to meet its short-term obligations. The current ratio, which measures the company's ability to pay its current liabilities with its current assets, has declined over the past five years from 1.68 in 2020 to 1.31 in 2024. This indicates that the company may be facing some challenges in meeting its short-term obligations as its current assets are only 1.31 times its current liabilities.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also declined from 1.01 in 2021 to a very low 0.13 in 2024. This suggests that Kohls Corp may have difficulty meeting its short-term obligations without relying on inventory, which could be a cause for concern.

Furthermore, the cash ratio, which is the most conservative liquidity ratio and measures a company's ability to cover its current liabilities with cash and cash equivalents, has also decreased over the years, indicating a potential liquidity challenge. The cash ratio dropped from 0.26 in 2020 to 0.07 in 2024, which signifies that Kohls Corp may have limited cash available to meet its immediate obligations.

Overall, based on the declining trends in the current ratio, quick ratio, and cash ratio, Kohls Corp appears to be experiencing liquidity constraints that could impact its ability to comfortably cover its short-term liabilities with its current assets. It is important for the company to closely monitor its liquidity position and take appropriate measures to improve its liquidity position going forward.

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Additional liquidity measure

The cash conversion cycle of Kohls Corp has fluctuated over the past five years. As of February 3, 2024, the company's cash conversion cycle stood at 41.58 days, showing a slight improvement compared to the previous year's 42.27 days. This indicates that Kohls Corp was able to convert its investments in inventory and accounts receivable into cash more efficiently during the most recent period.

Looking back further, in January 2022, the cash conversion cycle was notably lower at 32.11 days, suggesting that Kohls Corp managed its working capital more effectively that year. However, there was a slight increase in the cash conversion cycle in January 2021 and February 2020, reaching 43.14 days and 45.45 days, respectively.

Overall, a lower cash conversion cycle signifies better management of working capital and faster conversion of inventory and receivables into cash, indicating improved liquidity and operational efficiency. Kohls Corp should continue to monitor and strive to optimize its cash conversion cycle to enhance its financial performance and strengthen its overall liquidity position.