Ross Stores Inc. (NASDAQ:ROST)

Current Ratio

The current ratio exhibits moderate fluctuations over the observed periods. Initially, it remains relatively stable between approximately 1.57 and 1.71 from early 2017 through early 2019. A noticeable decline occurs in mid-2019 to early 2020, where values drop to near 1.26-1.34. Following this period, there is a marked recovery and consistent upward trend from mid-2020 onward, with the ratio increasing progressively to reach nearly 1.95 by late 2022. This suggests an improvement in short-term liquidity and the company’s ability to cover current liabilities with current assets in recent years.

Quick Ratio

The quick ratio also shows variability across the quarters. From early 2017 to early 2019, it stabilizes around the range of 0.61 to 0.76, indicating a fairly consistent level of liquid assets relative to current liabilities. A significant dip occurs during mid to late 2019 where the ratio declines to as low as 0.44, reflecting a reduction in the most liquid assets excluding inventory. Subsequently, from early 2020 onward, a sharp increase is evident, peaking above 1.25 in mid-2020, which demonstrates enhanced liquidity excluding inventories. The ratio remains relatively elevated with slight fluctuations through late 2022, generally staying above 1.1, pointing to strengthened liquid asset management post-2020.

Cash Ratio

The cash ratio follows a pattern similar to the quick ratio, reflecting access to cash and cash equivalents relative to current liabilities. Initially, values fluctuate modestly between 0.56 and 0.7 up to early 2019, indicating a stable cash position. A decline occurs in the periods close to late 2019 and early 2020, with the ratio dropping to as low as 0.4, suggesting a tightening of cash reserves. Post this decline, a pronounced upward shift is observed beginning in early 2020, with the ratio surpassing 1.0 by mid-2020 and continuing at similar levels through 2022. This trend highlights a significant improvement in the company’s cash availability to meet short-term obligations in recent years.

The quarterly financial data reveals several key trends regarding liquidity and working capital management. The company's current assets have generally shown an upward trajectory over the analyzed periods, albeit with occasional fluctuations. Starting from approximately 3,064,735 thousand US dollars, current assets increased notably to peak above 7,842,000 thousand US dollars in late 2021 before experiencing a slight decline towards the final reported quarter.

Current liabilities also increased over time, though with a somewhat more volatile pattern. Initial values of current liabilities were around 1,937,723 thousand US dollars, rising gradually with some fluctuations to a high of nearly 4,476,309 thousand US dollars by late 2021. Subsequent quarters indicate a reduction in current liabilities, declining to just over 3,464,230 thousand US dollars by the last period.

The current ratio, which reflects the firm's short-term liquidity, generally stayed above 1.5 across most periods, indicating a stable ability to cover short-term obligations with current assets. There was a dip into the 1.26 to 1.34 range during mid-2019 to early 2020, signaling tighter liquidity during that span. However, the ratio improved sharply thereafter, reaching values above 1.9 by late 2022. This improvement suggests an enhanced liquidity position with increased buffer in current assets relative to current liabilities.

Current Assets

Displayed a strong growth trend with intermittent fluctuations, peaking notably in the early 2021 period.

Current Liabilities

Also increased over the time series but showed peaks and troughs; a declining trend emerged post the early 2022 peak.

Current Ratio

Maintained a generally healthy liquidity profile above 1.5. A dip in 2019-2020 suggested temporary liquidity pressure, followed by sustained improvement through 2022, underscoring better working capital management or asset accumulation relative to liabilities.

Overall, the data suggests that the firm has improved its liquidity and ability to meet short-term obligations over the analyzed time frame. The peak and subsequent slight declines in both current assets and liabilities indicate active working capital management, possibly reflecting strategic adjustments to inventory, receivables, payables, or cash holdings. The consistent upward movement of the current ratio in recent quarters strengthens the view of a progressively stronger short-term financial position.

Trend in Total Quick Assets

The total quick assets show an overall increasing trend from April 2017 to October 2022. Initially fluctuating around the range of 1.2 to 1.5 million US dollars (in thousands), there is a notable surge starting from May 2020, where values rise sharply from approximately 2.7 million to over 5.7 million US dollars by mid-2021. After peaking around July 2021, a slight decline is observed but values remain above 4 million through to the final quarter of 2022.

Trend in Current Liabilities

Current liabilities also fluctuate throughout the period but generally increase from about 1.9 million US dollars in early 2017 to over 4.4 million by late 2021. This increase is accompanied by some volatility, particularly with sharp rises in late 2019 and early 2021. However, from early 2022 onward, current liabilities show a declining trend, dropping from approximately 4.2 million to about 3.5 million by the end of the analyzed period.

Trend in Quick Ratio

The quick ratio initially ranges between 0.56 and 0.76 in the period from 2017 to early 2020, indicating a relatively low short-term liquidity position. Starting from May 2020, the quick ratio improves significantly, crossing the threshold of 1.0 and peaking at 1.32 in mid-2021. Post-peak, the ratio slightly decreases but remains above 1.1, which suggests improved liquidity and a stronger ability to cover current liabilities with quick assets compared to previous years.

Insights on Liquidity Position

The sharp increase in total quick assets beginning in mid-2020 along with a corresponding rise in the quick ratio above 1.0 indicates a significant improvement in the company’s liquidity position. This improvement suggests better short-term financial health, as the company holds more liquid assets relative to its current liabilities. The peak liquidity ratio in mid-2021 and the maintenance of a ratio above 1.1 through late 2022 indicate a stable ability to meet short-term obligations.

Observations on Financial Stability

Despite the increase in current liabilities over the years, the more pronounced rise in quick assets has helped to enhance liquidity. The decline in liabilities in 2022 combined with sustained high quick assets suggests efforts to reduce short-term obligations and optimize working capital. The company appears to have strengthened its short-term financial stability, especially after 2020.

Overall Summary

The data reflect a period of transitioning liquidity conditions, with earlier quarters marked by modest and somewhat fluctuating short-term asset coverage relative to liabilities. The post-2020 period is characterized by a marked improvement in liquidity ratios owed to a substantial increase in quick assets and effective management of current liabilities. This shift points to enhanced operational or financial measures aimed at increasing financial flexibility and reducing liquidity risk.

The financial data over the observed periods reveals several notable trends in key liquidity measures and balance sheet components.

Total Cash Assets

Total cash assets exhibit a generally increasing trend over time, with some fluctuations. Initially, cash holdings remained relatively stable, fluctuating near the 1.1 to 1.4 billion mark through 2017 and 2018. Beginning in early 2020, a significant increase is evident: cash assets more than doubled from approximately 1.35 billion to over 4.8 billion by early 2021. Following this peak, cash levels stabilized somewhat but remained elevated relative to prior years, trending slightly downward toward the end of the period but still near 3.9 billion. This upward trend in cash suggests an accumulation of highly liquid resources, likely reflecting a strategic liquidity buildup.

Current Liabilities

Current liabilities have generally increased over the period but with some volatility. The earliest values hover between 1.8 and 2.2 billion in 2017 and 2018, followed by a more pronounced increase through 2019 and early 2020, reaching just over 2.8 billion. Thereafter, the liabilities escalate sharply, peaking near 4.4 billion in late 2021. A decreasing trend appears in the final periods, with current liabilities declining to roughly 3.5 billion by late 2022. Despite the recent reduction, current liabilities remain higher compared to the early years, indicating increased short-term obligations during the analyzed timeframe.

Cash Ratio

The cash ratio, measuring the coverage of current liabilities by cash and cash equivalents, experienced significant improvement over the observed periods. Initially, ratios are below 1, mostly ranging between 0.5 and 0.7, indicating that cash alone was insufficient to cover all current liabilities. However, beginning in early 2020, the ratio rises above 1, peaking near 1.28 in mid-2021, demonstrating an enhanced liquidity position whereby cash is sufficient to cover current liabilities. The ratio remains above 1 through the end of the timeline, stabilizing around 1.07 to 1.13, suggesting sustained improved liquidity.

In summary, the data reflects a marked increase in cash holdings alongside rising current liabilities until the early 2020s, followed by a stabilization and partial reduction in liabilities. The liquidity metrics indicate a transition from a relatively constrained cash position to a robust capacity to meet short-term obligations purely through cash assets, which could be indicative of strategic liquidity management in response to market or operational conditions. The overall patterns suggest a strengthened liquidity profile over time, especially notable from 2020 onward.