Tapestry Inc (TPR)

The liquidity ratios of Tapestry Inc. over the analyzed period demonstrate notable fluctuations, reflecting shifts in the company's short-term financial health.

Current Ratio:
The current ratio, which measures the company's ability to meet short-term obligations with its current assets, shows an overall upward trend from 1.56 as of September 30, 2020, reaching a peak of 6.59 on March 31, 2024. This indicates an increasing buffer of current assets relative to current liabilities, suggesting improved liquidity. After peaking, the ratio declines to 1.58 by December 2024 before rising again to 1.87 by June 2025. The April 2024 figure (6.59) is notably high, likely driven by temporary asset accumulation or reduced current liabilities.

Quick Ratio:
The quick ratio, which excludes inventory and prepayments from current assets, likewise demonstrates an upward trajectory, particularly during the period leading to March 2024, peaking at 5.80, compared to 0.97 in September 2020. This signifies that the company’s more liquid assets have strengthened substantially in recent periods, potentially indicating a conservative liquidity stance or effective liquidity management during those years. Similar to the current ratio, the quick ratio declines post-peak, with a value of 0.89 in June 2025.

Cash Ratio:
The cash ratio, which considers only cash and cash equivalents relative to current liabilities, mirrors the trend observed in the quick ratio, with significant increases reaching a peak of 5.43 on March 31, 2024, from 0.84 in September 2020. However, it experiences a notable drop afterward, settling at approximately 0.73 as of June 2025. This pattern indicates that during the peak periods, Tapestry held substantial cash reserves relative to current liabilities, though these reserves were reduced in the later periods.

Overall Observation:
The data reflect a period of enhanced liquidity from late 2020 through early 2024, with ratios indicating robust short-term financial capacity. The sharp increase in all three ratios leading up to March 2024 suggests that the company prioritized liquidity management, possibly through increased cash holdings or asset conversions. Post-March 2024, the ratios decline but generally remain above historical lows, implying a normalization of liquidity levels.

This pattern indicates that Tapestry Inc. experienced a strategic buildup of liquid assets during certain periods, enhancing its ability to cover short-term obligations, while recent figures suggest a moderation in liquidity levels. The significant fluctuations highlight the importance of examining underlying operational and strategic factors to understand the reasons behind these changes fully.

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Additional liquidity measure

The analysis of Tapestry Inc’s cash conversion cycle (CCC) from September 2020 through June 2025 indicates notable fluctuations with both periods of improvement and deterioration. Initially, in September 2020, the CCC was substantially high at 135.22 days, reflecting elongated cycles of cash conversion. This trend improved markedly by December 2020, with the cycle decreasing to 84.80 days, suggesting a more efficient management of inventory, receivables, and payables during that period.

Throughout 2021, the CCC exhibited variability, with values such as 103.81 days in March, 92.40 days in June, and a slight increase again in September to 99.35 days. The most significant improvement in 2021 occurred in December, when the CCC dropped to 65.17 days, indicating a more rapid cash conversion process. The early months of 2022 saw an increase to 102.91 days in March, followed by near stabilization in June at 98.74 days. However, this trend reversed in the latter part of 2022, with the CCC rising to 125.35 days in September and slightly decreasing to 111.11 days by December, signaling a lengthening of the cash conversion cycle during this period.

In 2023, the CCC continued to fluctuate, reaching highs of 134.10 days in March, and then decreasing to 105.86 days in June before climbing again to 134.26 days in September. The cycle narrowed somewhat by the end of the year, with a value of 97.29 days in December. During the first half of 2024, the CCC remained elevated, averaging around 111 days, with a slight decline to 101.74 days in June, but then increased again in September to 131.86 days.

Projections into 2025 suggest some cyclical variability, with the CCC estimated at 130.52 days in March, before decreasing to 98.23 days by June. Overall, Tapestry Inc's cash conversion cycle has demonstrated significant variability over the analyzed period. The fluctuations may be attributed to seasonal factors, operational adjustments, inventory management strategies, or changes in supplier and customer payment terms. The periods of reduction reflect improved operational efficiency, while the increases highlight challenges in managing the cash cycle effectively.