Ralph Lauren Corp Class A (RL)

The liquidity ratios of Ralph Lauren Corp Class A show a mixed performance over the past five years. The current ratio, which indicates the company's ability to cover its short-term liabilities with assets that can be converted to cash quickly, has fluctuated but generally remained above 1, indicating a healthy liquidity position.

The current ratio improved from 1.61 in 2020 to 2.29 in 2024, suggesting the company has a stronger ability to meet its short-term obligations with its current assets. However, there was a notable drop in the current ratio in 2022, which may indicate a relative decrease in liquidity during that period.

The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, also shows some variability. The quick ratio improved from 1.16 in 2020 to 1.54 in 2024, indicating a stronger ability to meet short-term obligations without relying on inventory. However, there was a dip in the quick ratio in 2023, suggesting a temporary decrease in liquidity.

The cash ratio, which reflects the company's ability to cover its short-term liabilities with cash and cash equivalents, has shown fluctuations as well. The cash ratio increased from 1.01 in 2020 to 1.22 in 2024, indicating a stronger cash position. However, there was a decrease in the cash ratio in 2023, which may signal a lower ability to cover short-term obligations purely with cash.

Overall, Ralph Lauren Corp Class A has generally maintained a solid liquidity position, as indicated by the current, quick, and cash ratios. However, the fluctuations in these ratios over the years highlight the importance of ongoing monitoring and management of liquidity to ensure the company can meet its financial obligations effectively.

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Additional liquidity measure

The cash conversion cycle for Ralph Lauren Corp Class A has fluctuated over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash inflows from sales.

In the fiscal year ending March 31, 2024, the cash conversion cycle stood at 120.66 days, showing an improvement compared to the previous year where it was 139.22 days. This reduction in the cycle indicates that the company was able to more efficiently manage its inventory and collections from customers, resulting in a quicker turnaround of cash.

Looking back at the trends over the five-year period, the cash conversion cycle has shown variability. In some years, such as FY2020, the cycle was relatively low at 89.29 days, suggesting a more efficient cash conversion process. However, there were also instances, like FY2023, where the cycle extended to 139.22 days, indicating potential challenges in managing inventory or collections.

Overall, the trend in the cash conversion cycle for Ralph Lauren Corp Class A demonstrates the company's ability to navigate fluctuations in operational efficiency and working capital management. The varying cycle lengths reflect the company's efforts in optimizing cash flow processes and highlight areas where improvements may be needed to enhance overall financial performance.