Scholastic Corporation (SCHL)

The liquidity ratios of Scholastic Corporation over the observed period demonstrate notable trends. The current ratio, which measures the company's ability to cover its short-term liabilities with its short-term assets, showed steady growth from 1.48 in May 2021 to a peak of 1.64 in May 2023. This indicates a strengthening position in short-term liquidity during this timeframe. However, a decline is observed thereafter, with the ratio decreasing to 1.27 by May 2024 and further to 1.16 by May 2025, signaling a reduced cushion of current assets relative to current liabilities.

The quick ratio, a more stringent measure of liquidity excluding inventory from current assets, displayed improvement from 1.02 in May 2021 to 1.50 in May 2023, suggesting enhanced ability to meet short-term obligations without reliance on inventory sales. Nonetheless, this ratio experienced a significant contraction thereafter, dropping sharply to 0.68 in May 2024 and further to 0.63 in May 2025. This decline indicates a diminishing liquidity position when excluding inventory, potentially raising concerns about the company's immediate short-term financial flexibility.

The cash ratio, which assesses the most liquid assets (cash and cash equivalents) relative to current liabilities, followed a somewhat similar pattern. It remained relatively stable from 0.53 in May 2021 to 0.51 in May 2022, then increased to 0.66 in May 2023. Subsequently, a notable decrease occurred, with the ratio falling to 0.21 in May 2024 and further to 0.20 in May 2025. The declining trend in the cash ratio suggests that the company's cash holdings as a proportion of current liabilities have substantially diminished in recent years, indicating reduced immediate liquidity.

Overall, while the company experienced improvements in liquidity ratios up to 2023, the subsequent decline across all three measures indicates a weakening liquidity position. These trends highlight a decreasing capacity to meet short-term obligations promptly, especially when considering the rapid reduction in cash and quick assets relative to current liabilities.

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Additional liquidity measure

The cash conversion cycle (CCC) for Scholastic Corporation has demonstrated notable fluctuations over the period from May 31, 2021, to May 31, 2025. Initially, the CCC was recorded at approximately 168.94 days as of May 31, 2021. This indicates that, during this period, it took the company roughly 169 days to convert its investments in inventory and receivables into cash, after considering the timing of accounts payable.

Subsequently, there was a significant reduction by May 31, 2022, with the cycle decreasing to approximately 129.26 days, reflecting improved efficiency in managing the operating cycle. This decline suggests that Scholastic became quicker in converting its inventory and receivables into cash relative to its payables.

In the following year, by May 31, 2023, the CCC increased slightly to around 137.39 days, indicating a modest elongation in the cycle. This could imply some delays or inefficiencies creeping back into inventory management, receivables collection, or payables management.

Between May 31, 2023, and May 31, 2024, the cycle continued to decrease, reaching approximately 122.52 days. This downward trend suggests ongoing improvements or efficiencies gained, further shortening the time taken to convert current assets into cash.

Most recently, as of May 31, 2025, the CCC further declined to approximately 104.61 days. This current figure indicates a substantial improvement in operating efficiency, reducing the time needed to complete the working capital cycle significantly over the five-year span.

Overall, the data exhibits a general trend of reduction in the cash conversion cycle over the observed period, signaling enhancements in operational and working capital management. The decreasing cycle duration implies that Scholastic Corporation is becoming increasingly effective in managing its inventory, receivables, and payables, thereby reducing the cash-to-cash timeframe and improving liquidity and operational efficiency.