Scholastic Corporation (SCHL)

The liquidity ratios of Scholastic Corporation over the analyzed period exhibit notable trends and variances, indicative of the company's evolving short-term liquidity position.

The current ratio, which measures the company's ability to meet its short-term obligations with its current assets, generally remains within a moderate range, fluctuating between approximately 1.14 and 1.87. The highest levels are observed in August 2020 (1.87) and May 2023 (1.64), suggesting periods where the company's current assets substantially cover its current liabilities. Conversely, the ratio declines toward its lower bounds in August 2024 (1.14) and February 2025 (1.16), signaling a tightening liquidity buffer, although it remains above the critical threshold of 1.0, which indicates that current assets still exceed current liabilities.

The quick ratio, which refines liquidity assessment by excluding inventory from current assets, reveals a similar but more sensitive trend. It generally hovers around 0.55 to 1.50 during the period, with notable peaks in May 2023 (1.50), indicating improved immediate liquidity, and troughs in August 2023 and beyond (as low as 0.53). The frequent dips below 1.0 suggest periods where the company's liquid assets (excluding inventory) may not comfortably cover its short-term liabilities, highlighting potential liquidity concerns during certain intervals.

The cash ratio, representing the most conservative measure of liquidity by focusing solely on cash and cash equivalents, displays a downward trend over time. The ratio starts at 0.63 in August 2020 and generally declines, reaching as low as 0.14 in August 2024. Periods such as May 2023 show a brief increase to 0.66, yet, overall, the cash ratio indicates that Scholastic's cash position relative to its current liabilities has weakened, implying reduced immediate cash reserves to settle short-term obligations.

In summary, the data depict a trend of modest liquidity initially maintained within acceptable bounds, with some fluctuations reflecting changes in asset composition and short-term financial management. While the current and quick ratios remain above critical levels (with the current ratio consistently above 1.0), the declining cash ratio suggests a tightening of readily available cash resources, potentially exposing the company to liquidity risks if these trends continue.

---

Additional liquidity measure

The data reflects the fluctuations in Scholastic Corporation's cash conversion cycle (CCC) over an approximate four-year period from August 2020 to May 2025. The CCC measures the duration, in days, it takes for the company to convert its investments in inventory and other resources into cash flows from sales, encompassing the periods of inventory turnover, accounts receivable collection, and accounts payable management.

Initially, the CCC increased from approximately 157 days in August 2020 to a peak of around 202.7 days in February 2021, indicating a lengthening in the time taken for cash to cycle through operations. This escalation suggests potential delays in inventory turnover, slower receivables collection, or extended payables periods during that period.

Subsequently, there was a notable decline beginning after August 2021, with the CCC reducing to roughly 137 days by May 2023. This improvement reflects a more efficient management of working capital components, leading to faster cash conversion. The decline indicates enhanced operational efficiency, possibly through better inventory management, more prompt receivables collections, or strategic payment terms with suppliers.

However, from May 2023 onwards, the CCC appears to fluctuate, with some upward movement, reaching approximately 144.8 days in February 2025, before decreasing again to about 114 days in May 2025. These variations could be attributable to changes in operational strategies, seasonal factors, or adjustments in credit and payment policies.

Overall, the trend demonstrates a significant reduction in the cash conversion cycle over the analyzed period. The company appears to have succeeded in optimizing its working capital management, thereby reducing the time cash is tied up in the operational cycle. This trend is generally positive, as a shorter CCC typically indicates more efficient cash flow management, contributing to improved liquidity and operational flexibility.