La-Z-Boy Incorporated (LZB)

La-Z-Boy Incorporated's liquidity position, as reflected by its key ratios, has shown some fluctuations over the past five years.

The current ratio, which measures the company's ability to meet short-term obligations with its current assets, has been relatively strong and consistent over the period, with a current ratio of 1.91 in 2024 compared to a low of 1.41 in 2022. This indicates that La-Z-Boy has a solid cushion of current assets to cover its current liabilities.

The quick ratio, which provides a more conservative measure of liquidity by excluding inventory from current assets, has also varied but generally remained above 1. This suggests that La-Z-Boy can quickly meet its short-term obligations without relying on selling inventory.

The cash ratio, revealing the company's ability to cover its current liabilities with cash and cash equivalents, has improved steadily over the years, reaching 0.80 in 2024 from a low of 0.39 in 2022. This indicates that La-Z-Boy has a sufficient amount of cash on hand to meet its immediate obligations without relying on other current assets.

Overall, La-Z-Boy's liquidity ratios indicate a healthy liquidity position. The company has a comfortable level of current assets to cover its short-term liabilities, and its ability to quickly meet obligations is supported by an improving cash ratio. However, continuous monitoring of liquidity ratios is essential to ensure the company's ability to weather unexpected financial challenges.

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Additional liquidity measure

The cash conversion cycle for La-Z-Boy Incorporated has shown some fluctuations over the past five years. In the most recent fiscal year ending April 27, 2024, the company's cash conversion cycle was 77.05 days, an increase from the previous year's 64.00 days. This indicates that it took the company longer to convert its investments in inventory and accounts receivable into cash.

Comparing to the cycle in April 30, 2022, which was 78.91 days, the company was able to slightly improve its cash conversion efficiency in the last fiscal year. However, the efficiency is still lower than in April 25, 2020, when the cycle was 68.14 days.

Overall, La-Z-Boy Incorporated's cash conversion cycle has been relatively stable over the years, with some fluctuations observed. It is essential for the company to continue monitoring and managing its inventory and accounts receivable effectively to optimize its cash conversion cycle and improve its liquidity position.