La-Z-Boy Incorporated (LZB)

The analysis of La-Z-Boy Incorporated’s liquidity ratios over the period from July 2022 to April 2025 indicates an overall improving liquidity position, with some fluctuations along the way.

The current ratio, which measures the company’s ability to cover its short-term liabilities with its short-term assets, exhibits a steady upward trend. Starting at 1.44 in late July 2022, it gradually increases, reaching a peak of approximately 1.95 by October 2023. This increase suggests enhanced liquidity and a stronger capacity to meet short-term obligations. After reaching this peak, the current ratio stabilizes slightly, fluctuating modestly within the range of approximately 1.85 to 1.91 through early 2025, indicating maintained liquidity levels that are comfortably above the critical threshold of 1.0, which signals the company's ability to meet its short-term liabilities.

The quick ratio, a more stringent measure of liquidity excluding inventories, shows a similar improving trend initially. It begins at 0.64 in July 2022, then steadily increases, surpassing 1.0 in April 2023 and reaching around 1.17 by October 2023. This suggests the company’s ability to cover immediate liabilities with its most liquid assets improved significantly during this period. However, there is a slight decline thereafter, falling below 1.0 at some points in early 2024, notably dropping to 0.97 in January 2025. Despite this temporary decline, the quick ratio remains close to or above 1.0 for most of the period, implying a generally sound short-term liquidity stance with a focus on liquid assets rather than inventories.

The cash ratio, which is the most conservative liquidity measure as it considers only cash and cash equivalents relative to current liabilities, shows consistent growth from 0.40 in July 2022 to a peak of approximately 0.80 in April 2024. This steady increase indicates that La-Z-Boy has been bolstering its cash reserves relative to its short-term liabilities, enhancing its immediate liquidity buffer. Subsequently, the cash ratio declines slightly to around 0.69–0.78 in early 2025, but remains at a relatively healthy level.

In summary, La-Z-Boy Incorporated demonstrates a positive trend in its liquidity position over the analyzed period. The steady increase in the current and quick ratios indicates improved capacity to cover short-term obligations, with notable strengthening in liquidity since 2022. The fluctuations observed in the quick and cash ratios after reaching their peaks suggest a slight tightening in liquidity at certain points, but overall, the ratios imply that the company maintains a stable and strong short-term financial position, with sufficient liquid assets to meet its responsibilities.

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Additional liquidity measure

The analysis of La-Z-Boy Incorporated’s cash conversion cycle (CCC) over the observed period indicates periods of fluctuation with an overall trend towards stabilization around certain levels. The data reveals that the CCC experienced a high of approximately 89.73 days on July 31, 2022, and subsequently decreased to a low of approximately 65.84 days on April 29, 2023. This suggests an initial contraction in the cycle, reflecting improvements in the company's efficiency in managing inventory, receivables, or payables.

Throughout the latter part of 2023 and into early 2024, the CCC generally increased again, reaching values above 86 days on October 31, 2023, before declining slightly to around 73.31 days by April 2025. This indicates some cyclical variation, with periods of expansion and contraction, but without drastic long-term trend shifts.

The fluctuations in these durations may be associated with changes in operational efficiencies, inventory management practices, credit terms extended to customers, or payment terms negotiated with suppliers. The initial reduction in the cycle duration suggests periods where the company improved liquidity management or accelerated cash flows. Conversely, the later increases could reflect strategic or operational adjustments, seasonal variations, or shifts in credit policies.

Overall, La-Z-Boy’s cash conversion cycle demonstrates a degree of variability but remains within a relatively narrow range, suggesting a stabilized approach to working capital management over the observed time frame. The company appears to have effectively managed its liquidity, balancing inventories, receivables, and payables to sustain competitive operations, despite periodic fluctuations.