Target Corporation (TGT)
Liquidity ratios
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | |
|---|---|---|---|---|---|
| Current ratio | 0.94 | 0.91 | 0.92 | 0.99 | 1.03 |
| Quick ratio | 0.23 | 0.20 | 0.11 | 0.27 | 0.42 |
| Cash ratio | 0.23 | 0.20 | 0.11 | 0.27 | 0.42 |
Target Corporation's liquidity ratios have shown a downward trend over the years. The current ratio, a measure of short-term liquidity, decreased from 1.03 in January 30, 2021 to 0.94 in February 1, 2025, indicating a decline in the company's ability to cover its short-term liabilities with current assets.
Similarly, the quick ratio, a more stringent measure of liquidity as it excludes inventory, decreased significantly from 0.42 in January 30, 2021 to 0.23 in February 1, 2025. This suggests a decreasing ability of Target Corporation to meet its short-term obligations without relying on inventory.
The cash ratio, which indicates the proportion of current liabilities that can be covered by cash and cash equivalents, also showed a similar downward trend from 0.42 in January 30, 2021 to 0.23 in February 1, 2025. This implies that Target Corporation's ability to cover its short-term liabilities strictly with cash has weakened over the years.
Overall, the decreasing trend in these liquidity ratios raises concerns about Target Corporation's ability to meet its short-term obligations and highlights the importance of closely monitoring its liquidity position in the future.
See also:
Additional liquidity measure
| Feb 1, 2025 | Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | -1.13 | -0.76 | 0.04 | -5.92 | -9.25 |
The cash conversion cycle of Target Corporation has shown a general improvement over the years, indicating a more efficient management of cash flows related to the company's operations. The cycle was negative for the years 2021, 2022, 2024, and 2025, implying that Target Corporation was able to convert its investments in inventory and accounts receivable into cash faster than it paid off its liabilities during these periods. This suggests a strong ability to generate cash from its operating activities. Furthermore, the trend shows a consistent reduction in the duration of the cash conversion cycle up to 2023, where it reached almost breakeven. Overall, the company's cash conversion cycle portrays effective working capital management strategies and operational efficiency over the years, contributing positively to its overall financial health.