Tapestry Inc (TPR)

Tapestry Inc's liquidity ratios have shown significant improvement over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has been increasing steadily from 1.47 in 2020 to 5.14 in 2024. This indicates that Tapestry has a stronger position in terms of liquidity compared to previous years.

The quick ratio, also known as the acid-test ratio, provides a more stringent assessment of liquidity by excluding inventories from current assets. Tapestry's quick ratio has also seen a substantial increase over the years, rising from 0.93 in 2020 to 4.34 in 2024. This suggests that the company has become more efficient in meeting its short-term liabilities without relying on inventory.

Furthermore, the cash ratio, which measures the ability of a company to cover its short-term liabilities with its cash and cash equivalents, has shown an upward trend, increasing from 0.82 in 2020 to 4.21 in 2024. This indicates that Tapestry has a sufficient level of cash on hand to meet its immediate financial obligations.

Overall, the improving liquidity ratios of Tapestry Inc demonstrate its stronger financial position and ability to meet its short-term commitments. The company's enhanced liquidity position may provide it with greater flexibility to navigate economic challenges and pursue growth opportunities in the future.

---

Additional liquidity measure

The cash conversion cycle of Tapestry Inc has shown variability over the past five years. In the most recent period ending June 30, 2024, the company's cash conversion cycle was 88.82 days, showing an improvement from the previous year. This indicates that Tapestry has been able to manage its working capital more efficiently in converting its inventory and receivables into cash.

Looking back, the cash conversion cycle was highest in June 30, 2020, at 142.68 days, reflecting a longer period for Tapestry to convert its investments in inventory and receivables into cash. However, since then, there has been a decreasing trend in the cash conversion cycle, indicating a more streamlined process in managing working capital.

Overall, a lower cash conversion cycle signifies that Tapestry has been able to collect payments from customers, manage inventory levels, and pay suppliers in a more efficient manner. This improvement may indicate better liquidity and operational efficiency within the company over the years.