Lululemon Athletica Inc. (LULU)

The liquidity ratios of Lululemon Athletica Inc. have shown fluctuating trends over the past five years, indicating changes in the company's short-term liquidity position.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has generally been healthy and improving, going from 2.91 in 2020 to 2.49 in 2024. This suggests that Lululemon has a strong ability to meet its short-term obligations with its current assets.

The quick ratio, a more stringent indicator of liquidity that excludes inventory from current assets, has also shown volatility over the years. It increased from 2019 to 2020, indicating a stronger position, before decreasing in the subsequent years. This may indicate fluctuations in Lululemon's ability to cover its short-term liabilities without relying on inventory.

The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents, has followed a similar pattern of fluctuation. Although it generally decreased from 2020 to 2024, the ratios are still above 1, implying that Lululemon holds sufficient cash to cover its current liabilities.

Overall, while Lululemon's liquidity ratios have shown variability over the years, the company appears to maintain a satisfactory liquidity position, with the current and cash ratios consistently above 1, indicating a solid ability to meet its short-term obligations. However, the downward trends in the quick and cash ratios in recent years may warrant further analysis and monitoring in the future to ensure continued liquidity strength.

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See also:

Lululemon Athletica Inc. Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of Lululemon Athletica Inc. has exhibited fluctuations over the past five years. In the most recent fiscal year ending on January 28, 2024, the company's cash conversion cycle decreased to 52.77 days, indicating a more efficient management of cash, inventory, and receivables compared to the previous year.

In fiscal year 2023, the cash conversion cycle was higher at 74.45 days, suggesting that the company took longer to convert its investments in inventory and accounts receivable into cash during that period. However, this situation improved in fiscal year 2022, where the cycle decreased to 54.65 days, indicating better working capital management.

Looking back at fiscal years 2021 and 2020, the company's cash conversion cycle was relatively stable at 53.44 days and 55.48 days, respectively. These figures suggest that Lululemon Athletica Inc. maintained a consistent performance in managing its working capital during those years.

Overall, the downward trend in the cash conversion cycle in the most recent fiscal year is a positive signal, indicating that Lululemon Athletica Inc. has improved its efficiency in converting investments in inventory and accounts receivable into cash, which may positively impact the company's liquidity and overall financial health.