Lululemon Athletica Inc. (LULU)
Liquidity ratios
| Jan 31, 2025 | Jan 31, 2024 | Jan 28, 2024 | Jan 31, 2023 | Jan 29, 2023 | |
|---|---|---|---|---|---|
| Current ratio | 1.75 | 2.49 | 2.49 | 2.12 | 2.12 |
| Quick ratio | 0.98 | 1.38 | 1.45 | 0.77 | 0.86 |
| Cash ratio | 0.98 | 1.38 | 1.38 | 0.77 | 0.77 |
Lululemon Athletica Inc. has shown consistent improvement in its current ratio from 2.12 in January 2023 to 2.49 in January 2024. The current ratio measures the company's ability to cover its short-term obligations with its current assets. A current ratio above 1 indicates that the company has more current assets than current liabilities, signaling good short-term financial health.
In terms of the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, Lululemon Athletica Inc. has also demonstrated improvement from 0.86 in January 2023 to 1.38 in January 2024. This indicates that the company has a sufficient level of highly liquid assets to cover its short-term liabilities without relying on inventory.
The cash ratio, which specifically looks at the ability to cover current liabilities with cash and cash equivalents, also reflects a positive trend for Lululemon Athletica Inc. The company increased its cash ratio from 0.77 in January 2023 to 1.38 in January 2024, before seeing a slight decrease to 0.98 in January 2025.
Overall, Lululemon Athletica Inc. has maintained a healthy liquidity position with current and quick ratios consistently above 1 and showing improvement over time. The company's ability to cover its short-term obligations with its liquid assets and cash reserves is a positive indicator of its financial stability and ability to meet its short-term financial commitments.
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Additional liquidity measure
| Jan 31, 2025 | Jan 31, 2024 | Jan 28, 2024 | Jan 31, 2023 | Jan 29, 2023 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 121.92 | 120.48 | 52.77 | 146.01 | 74.45 |
Based on the data provided, the cash conversion cycle for Lululemon Athletica Inc. has shown fluctuations over the past few years. In January 2023, the company had a relatively efficient cash conversion cycle of 74.45 days, indicating that it was able to convert its inventory into cash within a reasonable timeframe. However, by January 2024, the cash conversion cycle had increased significantly to 120.48 days, suggesting a potential delay in converting inventory into cash.
Subsequently, in January 2025, the cash conversion cycle remained elevated at 121.92 days, indicating that Lululemon Athletica Inc. continued to face challenges in efficiently managing its working capital and converting inventory into cash. Overall, the data reflects some variability in Lululemon's cash conversion cycle, highlighting the importance of closely monitoring and managing the company's operational efficiency and liquidity.