Scholastic Corporation (SCHL)

Scholastic Corporation's liquidity ratios have shown a trend of decline over the past five years. The current ratio, which measures the company's ability to meet short-term liabilities with its current assets, has decreased from 2.06 in 2020 to 1.27 in 2024. This indicates a potential weakening in the company's short-term liquidity position.

Similarly, the quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, has also decreased from 1.44 in 2020 to 0.68 in 2024. This suggests that Scholastic Corporation may have difficulty meeting its immediate obligations without relying on inventory sales.

Furthermore, the cash ratio, which is the most conservative measure of liquidity and only includes cash and cash equivalents in the calculation, has also shown a downward trend from 0.79 in 2020 to 0.21 in 2024. This indicates a diminishing ability of the company to cover its short-term obligations solely with cash on hand.

Overall, the declining trend in Scholastic Corporation's liquidity ratios raises concerns about its ability to efficiently manage its short-term financial obligations. It may be prudent for the company to closely monitor its liquidity position and consider implementing strategies to improve its short-term financial health.

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Additional liquidity measure

The cash conversion cycle of Scholastic Corporation has shown fluctuations over the past five years. In May 2024, the company's cash conversion cycle was 86.28 days, an improvement from the previous year's 98.88 days. This indicates that, on average, it takes Scholastic Corporation approximately 86.28 days to convert its investments in inventory and other resources into cash flows from sales.

Comparing this to earlier years, the trend has generally been positive, with the cash conversion cycle decreasing from 133.61 days in May 2021 to 86.28 days in May 2024. This may suggest more efficient management of inventory, receivables, and payables, leading to a quicker conversion of these assets into cash.

However, it is worth noting that the cash conversion cycle increased in May 2022 compared to the previous year, which could indicate potential challenges in working capital management during that period.

Overall, Scholastic Corporation's ability to manage its cash conversion cycle effectively is crucial for optimizing its liquidity and operational efficiency. Analyzing trends in the cash conversion cycle can provide insights into the company's working capital management practices and efficiency in converting investments into cash flows.