lululemon athletica inc. (NASDAQ:LULU)

Current Ratio

The current ratio demonstrates relatively strong liquidity throughout the observed periods, starting at 2.68 and exhibiting some fluctuations. There is a noticeable decline from May 2020 through early 2022, reaching lows around 1.86 to 1.91. Subsequently, the ratio improves and stabilizes above 2.0 from early 2023 onwards, peaking again around 2.72 in April 2024 before slightly declining toward the latter periods. Overall, the current ratio indicates adequate short-term asset coverage of liabilities, with intermittent variations but maintaining a level generally above 2.0 in recent years.

Quick Ratio

The quick ratio shows more volatility and a downward trend in the earlier quarters, starting at 1.38 and decreasing sharply to values around 0.34 to 0.60 between mid-2021 and late 2022. This suggests a reduction in the most liquid assets excluding inventory available to cover current liabilities during this timeframe. Improvements are observed from early 2023, rising above 0.80 and peaking close to 1.47 in early 2024, indicating a recovery in liquid asset strength. However, the ratio again declines moderately in the most recent quarters. The variability suggests fluctuating liquidity, which may reflect changes in inventory levels or accounts receivable management.

Cash Ratio

The cash ratio follows a similar pattern to the quick ratio but at slightly lower levels, beginning at 1.30 in early 2020. There is a marked decline to the range of 0.27 to 0.54 between mid-2021 and late 2022, indicating a significant reduction in pure cash and cash equivalents relative to current liabilities during those quarters. From early 2023, the cash ratio improves again, reaching approximately 1.38 in April 2024, before gradually declining in subsequent periods to below 1.00. This indicates more conservative cash coverage of current liabilities initially, recovery mid-period, followed by some easing in liquidity toward the end of the data horizon.

Overall Insights

Collectively, the liquidity ratios suggest the company maintained a generally healthy liquidity profile but experienced notable fluctuations between 2020 and 2025. The decline in quick and cash ratios during 2021 and 2022 points to reduced liquid resources independent of inventory, which might warrant closer examination of working capital components during that interval. The subsequent recovery in these ratios suggests improved cash and receivables management or asset reallocation strategies. Despite these variations, the current ratio's consistent maintenance above 1.8 indicates the company was largely able to meet short-term obligations throughout the period. The cyclical nature of these metrics may reflect operational or market dynamics affecting liquidity and asset composition over time.

The analysis of the presented quarterly financial data reveals several notable trends and fluctuations in key liquidity metrics over the observed periods.

Current Assets

The current assets exhibit a general upward trajectory from May 2020 through to August 2025. Starting from approximately 1.69 billion USD in early May 2020, there is an increasing accumulation of current assets, reaching a peak close to 4.06 billion USD by January 2024. Following this peak, there is a modest decline but the values remain substantially elevated compared to earlier periods, maintaining levels above 3.5 billion USD. This overall increase suggests an expansion in resources readily convertible to cash or consumable within a year, implying potentially enhanced liquidity or operational scaling over the timeline.

Current Liabilities

Conversely, current liabilities have also increased from around 631 million USD in May 2020 to about 1.84 billion USD in early 2025, indicating a growing obligation base within the same time horizon. Notably, there are episodic rises and mild declines, with the liabilities peaking around 1.83 billion USD in early 2025. The upward trend in current liabilities may reflect rising short-term obligations such as accounts payable, accrued expenses, or current portions of long-term debt, which should be considered in the context of current asset growth.

Current Ratio

The current ratio starts at a strong level of 2.68 in May 2020, indicating that current assets were nearly 2.7 times current liabilities, suggesting solid short-term financial health. However, it declines significantly to a low of 1.86 by January 2022, reflecting either faster growth in liabilities than assets or a reduction in liquid assets. Subsequent periods show a recovery and gradual increase in the current ratio, fluctuating around 2.0 to 2.7, and reaching 2.72 by April 2024. The ratio then experiences modest setbacks but remains above 2.0, signaling the company’s maintained ability to cover short-term liabilities with assets. The fluctuations imply periods of varying liquidity management but generally stable short-term financial resilience throughout the observed interval.

In summary, the company shows increased scale in both current assets and liabilities over time, with liquidity metrics indicating overall prudent management of short-term financial obligations. While the current ratio experiences some volatility, it consistently remains at levels suggesting a favorable liquidity position. This persistent adequacy in liquidity ratios supports a conclusion of sustained operational flexibility and effective working capital management across the reviewed quarters.

Analysis of Total Quick Assets

The total quick assets demonstrate significant volatility over the periods observed. Initially, there was a decline from 871,690 thousand USD to 541,353 thousand USD within mid-2020. This was followed by a recovery phase, as values increased to a peak of 2,368,740 thousand USD by early 2024. Subsequently, there is a downward trend observed through mid to late 2025, with quick assets declining to 1,295,052 thousand USD. Overall, the quick assets exhibit cyclical fluctuations with notable peaks and troughs.

Current Liabilities Movement

Current liabilities generally show an upward trajectory from 631,496 thousand USD in mid-2020 to a high of 1,839,630 thousand USD by early 2025. There are periods of slower increases and brief declines, particularly after the peak in early 2025, where liabilities decrease to approximately 1,557,346 thousand USD by mid-2025. The consistent rise in liabilities over the examined timeline suggests increasing short-term obligations or financing needs.

Trends in Quick Ratio

The quick ratio exhibits considerable fluctuation, indicating varying liquidity positions. Initially, the ratio decreases from 1.38 in mid-2020 to a low of 0.34 by late 2022, reflecting a weakening ability to cover current liabilities with quick assets. This period corresponds with the observed decrease in quick assets and rising liabilities. After this trough, there is a recovery phase where the ratio improves to a peak of 1.47 in mid-2024, signifying enhanced liquidity. Later periods show variability again, ending near 0.83 in mid-2025, indicating a moderate liquidity position but somewhat lower than earlier peaks.

Summary Insights

The data indicates that liquidity was notably pressured during 2021 to 2022, as quick assets declined sharply while liabilities continued to rise, leading to a weak quick ratio. The substantial improvement in quick assets and the quick ratio around 2023 to 2024 suggests effective management or asset restructuring to strengthen short-term financial health. However, the decrease in both quick assets and quick ratio in the most recent periods, alongside still elevated liabilities, may imply emerging liquidity challenges. Continuous monitoring of this trend is advisable to ensure the entity maintains sufficient quick asset coverage for its current liabilities.

Total Cash Assets

Over the reviewed periods, total cash assets exhibited significant fluctuations. Initially, in early 2020, cash assets started at a high level around $823 million, followed by a decline through mid to late 2020 reaching approximately $481 million. Starting in early 2021, there was a rebound with cash assets increasing to values exceeding $1 billion on multiple occasions. Notably, in early 2024, cash assets peaked sharply at around $2.24 billion, marking the highest level in the observed timeline. However, this peak was succeeded by a gradual decline towards the latter quarters, settling near $1.16 billion by mid-2025. Overall, the trend indicates periods of significant cash accumulation interspersed with phases of reduction.

Current Liabilities

Current liabilities showed a general upward trend across the evaluated timeframe. Starting from approximately $631 million in mid-2020, liabilities increased with some instability but predominantly trending higher, reaching a peak above $1.8 billion in early 2025. The increments were more pronounced from late 2021 through 2025, reflecting a growing short-term obligation over time. Despite some minor contractions in liabilities during certain quarters, the overall movement suggests escalating current financial commitments.

Cash Ratio

The cash ratio, representing the ability to cover current liabilities with cash assets alone, exhibited considerable variability. Early on, the ratio was strong, beginning at 1.3 in mid-2020, demonstrating robust liquidity. This ratio declined sharply through late 2020 to early 2022, reaching lows around 0.27, indicating diminished immediate liquidity coverage. Post-2022, the cash ratio showed recovery and stabilization, ranging mostly between 0.66 and 1.38, with intermittent peaks near or above 1.3. Despite these rebounds, no sustained elevation above 1.0 was consistently maintained in the later quarters. The pattern suggests fluctuating liquidity management with periods of strain followed by recovery phases.

Summary

The financial data reveals a dynamic liquidity and obligations profile. Cash assets and current liabilities both increased substantially over the period, but with cash assets being more volatile. The cash ratio underscores this volatility, reflecting fluctuating readiness to cover short-term liabilities with cash. While there are intervals of strong liquidity indicated by cash ratios above 1, these are interspersed with periods of lower liquidity. The rising current liabilities amid variable cash reserves may point to an increasing reliance on short-term financing or operational demands. The peak in cash assets in early 2024 suggests a strategic accumulation or a significant inflow during that time, which was not sustained into subsequent periods. Overall, the company appears to navigate through cycles of liquidity tightening and strengthening, maintaining an adaptive but somewhat uneven liquidity position.