Lowe's Companies Inc (LOW)
Liquidity ratios
| Feb 2, 2024 | Nov 3, 2023 | Aug 4, 2023 | Feb 3, 2023 | Oct 28, 2022 | Jul 29, 2022 | Apr 29, 2022 | Jan 28, 2022 | Oct 29, 2021 | Jul 30, 2021 | Apr 30, 2021 | Jan 29, 2021 | Oct 30, 2020 | Jul 31, 2020 | May 1, 2020 | Jan 31, 2020 | Nov 1, 2019 | Aug 2, 2019 | May 3, 2019 | Feb 1, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.23 | 1.21 | 1.26 | 1.10 | 1.20 | 1.11 | 1.17 | 1.02 | 1.19 | 1.16 | 1.17 | 1.19 | 1.38 | 1.30 | 1.20 | 1.01 | 1.04 | 1.06 | 1.09 | 0.98 |
| Quick ratio | 0.08 | 0.09 | 0.22 | 0.09 | 0.18 | 0.09 | 0.17 | 0.07 | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | 0.06 | 0.06 | 0.13 | 0.18 | 0.05 |
| Cash ratio | 0.08 | 0.09 | 0.22 | 0.09 | 0.18 | 0.09 | 0.17 | 0.07 | 0.32 | 0.29 | 0.31 | 0.28 | 0.52 | 0.60 | 0.34 | 0.06 | 0.06 | 0.13 | 0.18 | 0.05 |
Lowe's Companies Inc's liquidity ratios, including the current ratio, quick ratio, and cash ratio, have fluctuated over the past few periods.
The current ratio, which measures the company's ability to cover its short-term obligations with its short-term assets, has generally stayed above 1.0, indicating that Lowe's has a sufficient level of current assets to meet its current liabilities. However, there have been fluctuations within this range, showing some variability in the company's liquidity position.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has shown more variability than the current ratio. The ratios have ranged from as low as 0.05 to as high as 0.60, indicating that Lowe's may at times struggle to meet its short-term obligations without relying on inventory.
The cash ratio, which is the most conservative liquidity measure as it only considers the company's cash and cash equivalents, has also shown significant variability. The ratios have ranged from 0.06 to 0.60, indicating that Lowe's may have varying levels of readily available cash to cover its immediate liabilities.
Overall, while Lowe's current ratio generally suggests a healthy liquidity position, the quick and cash ratios reveal more variability in the company's ability to cover its short-term obligations without relying on inventory or other current assets. It is important for Lowe's to monitor these ratios closely to ensure it maintains a strong liquidity position to meet its financial obligations.
See also:
Additional liquidity measure
| Feb 2, 2024 | Nov 3, 2023 | Aug 4, 2023 | Feb 3, 2023 | Oct 28, 2022 | Jul 29, 2022 | Apr 29, 2022 | Jan 28, 2022 | Oct 29, 2021 | Jul 30, 2021 | Apr 30, 2021 | Jan 29, 2021 | Oct 30, 2020 | Jul 31, 2020 | May 1, 2020 | Jan 31, 2020 | Nov 1, 2019 | Aug 2, 2019 | May 3, 2019 | Feb 1, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 38.05 | 32.22 | 28.20 | 32.11 | 31.49 | 29.38 | 28.07 | 27.11 | 23.40 | 23.23 | 19.33 | 24.24 | 14.14 | 4.64 | 18.70 | 30.60 | 34.54 | 29.44 | 24.59 | 29.97 |
The cash conversion cycle of Lowe's Companies Inc has shown fluctuation over the past two years, with a range between 4.64 days and 38.05 days. The trend indicates variability in the efficiency of the company's working capital management. The cycle measures the time it takes for the company to convert its investments in inventory into cash received from sales.
In recent periods, there has been an upward trend in the cash conversion cycle, reaching 38.05 days in the most recent period. This may suggest that Lowe's is taking longer to convert its inventory into sales and subsequently into cash. Conversely, in some prior periods, the cycle was relatively shorter, indicating more efficient management of working capital.
The company should analyze the reasons behind the prolonged cash conversion cycle in the most recent period and assess if there are any inefficiencies in inventory management, accounts receivable collection, or payment of accounts payable. By addressing any potential bottlenecks in the cycle, Lowe's can improve its cash flow management and overall financial performance.