Lamb Weston Holdings Inc (LW)

The current ratio for Lamb Weston Holdings Inc has shown a gradual decline from 2.37 as of May 31, 2022, to 1.29 as of May 31, 2024. This indicates a decrease in the company's ability to cover its short-term liabilities with its current assets over the specified period.

Similarly, the quick ratio has fluctuated over the years, with a notable decrease from 0.76 on May 28, 2023, to 0.04 on May 31, 2024. The quick ratio, which excludes inventory from current assets, provides a more stringent measure of liquidity. The sharp decline in the quick ratio suggests a reduction in the company's ability to meet its short-term obligations using its most liquid assets.

Moreover, the cash ratio has also witnessed a downward trend, falling from 0.75 on May 31, 2022, to 0.04 on May 31, 2024. The cash ratio specifically focuses on the ability of a company to cover its short-term liabilities with its cash and cash equivalents. The decreasing trend in the cash ratio indicates a decline in Lamb Weston Holdings Inc's ability to settle its short-term obligations solely with its available cash resources.

Overall, the liquidity ratios of Lamb Weston Holdings Inc demonstrate a deterioration in its short-term financial health and raise concerns about its ability to meet immediate payment obligations. It is crucial for the company to closely monitor and manage its liquidity position to ensure financial stability and solvency in the future.

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Additional liquidity measure

The cash conversion cycle for Lamb Weston Holdings Inc has fluctuated over the past few years.

As of May 31, 2022, the cash conversion cycle was 64.18 days, indicating that on average, it took the company approximately 64 days to convert its investments in inventory and other resources back into cash.

By May 28, 2023, the cycle extended to 73.30 days, suggesting a slower conversion of resources into cash. This increase could be a result of longer inventory holding periods or delays in collecting accounts receivable.

The cycle then increased significantly to 86.81 days by May 31, 2023, reflecting a potentially inefficient use of resources and longer cash conversion timelines.

However, there was a notable improvement by May 26, 2024, with the cycle decreasing to 62.59 days, indicating a more efficient use of resources and quicker conversion into cash.

Despite this improvement, the cycle increased again to 88.41 days by May 31, 2024, indicating a longer time period for the company to convert its investments back into cash.

Overall, the fluctuation in Lamb Weston Holdings Inc's cash conversion cycle suggests variations in inventory management, accounts receivable collection, and payment practices that impact the company's liquidity and operational efficiency.