Ross Stores Inc (ROST)
Liquidity ratios
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | |
|---|---|---|---|---|---|
| Current ratio | 1.62 | 1.77 | 1.77 | 1.90 | 1.90 |
| Quick ratio | 1.01 | 1.20 | 1.16 | 1.25 | 1.29 |
| Cash ratio | 1.01 | 1.16 | 1.16 | 1.25 | 1.25 |
Ross Stores Inc's liquidity ratios have been relatively stable over the past few years.
The current ratio, which measures the company's ability to cover its short-term obligations with current assets, has stayed around 1.90 for the fiscal years ending January 28 and January 31, 2023. However, there was a slight decrease to 1.77 for the fiscal years ending January 31, 2024 and February 3, 2024, and a further decline to 1.62 for the fiscal year ending January 31, 2025. Despite the downward trend, a current ratio above 1 indicates that Ross Stores Inc has more than enough current assets to cover its current liabilities.
The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also experienced a decrease over the years, from 1.29 and 1.25 in 2023 to 1.01 in 2025. This indicates a potential weakening ability to cover short-term obligations without relying on selling inventory.
The cash ratio, which is the most conservative measure of liquidity as it only considers cash and cash equivalents to cover current liabilities, has followed a similar pattern to the quick ratio. It has decreased from 1.25 in 2023 to 1.01 in 2025. This suggests that Ross Stores Inc may have a lower level of cash on hand relative to its current liabilities.
Overall, while Ross Stores Inc's liquidity ratios have trended downwards, they still generally indicate a healthy liquidity position, with the current ratio comfortably above 1. However, the declining trend in the quick and cash ratios may warrant further investigation into the company's liquidity management and potential need for improving cash flow strategies.
See also:
Additional liquidity measure
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 58.47 | 7.10 | 54.06 | 52.96 | 3.14 |
The cash conversion cycle for Ross Stores Inc fluctuated over the past five years. In January 2023, Ross Stores had a remarkably efficient cash conversion cycle of 3.14 days, indicating a quick conversion of inventory to cash. However, by January 2025, this cycle had extended to 58.47 days, signifying a slower turnover of cash within the company.
From January 2023 to January 2025, there was a noticeable increase in the cash conversion cycle, suggesting potential issues with inventory management or the collection of accounts receivable. The peak of 58.47 days in January 2025 may indicate that Ross Stores faced challenges in converting inventory to sales and subsequently collecting cash from customers.
In February 2024, there was a significant improvement in the cash conversion cycle to 7.10 days, which could be attributed to better inventory management or more efficient cash collection practices during that period.
Overall, Ross Stores Inc should closely monitor its cash conversion cycle and implement strategies to improve efficiency in converting inventory to cash and collecting payments from customers to enhance its working capital management and overall financial health.