lululemon athletica inc. (NASDAQ:LULU)

The analysis of the liquidity ratios over the reported quarters reveals notable fluctuations in the company's short-term financial health and ability to cover its liabilities with current assets.

Current Ratio

The current ratio started relatively high at 2.68 in early May 2020, indicating that current assets were well in excess of current liabilities at that time. This ratio decreased sharply to 1.86 by January 2022, suggesting a reduction in short-term liquidity. After this decline, the ratio showed recovery, reaching a peak of 2.72 in April 2024, before trending downward again toward 2.13 in November 2025. Overall, the current ratio maintained a level generally above 2.0 for much of the period, reflecting a comfortable buffer in meeting short-term obligations despite some volatility.

Quick Ratio

The quick ratio exhibited greater variability compared to the current ratio. Starting at 1.38 in May 2020, it dropped sharply to a low of 0.34 by October 2022, indicating a significant decline in liquid assets excluding inventory. This suggests periods where immediate liquidity was more constrained. Following this trough, the quick ratio recovered strongly to reach 1.47 in April 2024. Nevertheless, the ratio declined again in the last quarters, falling to 0.70 by November 2025. These fluctuations imply that the company's ability to meet short-term liabilities without relying on inventory was inconsistent throughout the timeframe.

Cash Ratio

The cash ratio, which measures the most liquid assets (cash and cash equivalents) relative to current liabilities, followed a trend similar to the quick ratio but remained consistently lower. It started at 1.30 in May 2020, fell to 0.27 by October 2022, indicating limited cash reserves during that period, then improved to a peak of 1.38 by April 2024. Subsequently, it decreased towards 0.56 in November 2025. The pronounced dips and partial recoveries suggest that the company periodically held minimal cash on hand relative to short-term obligations, potentially reflecting strategic cash management or operational cash flow dynamics.

In summary, while the current ratio remained at levels generally considered safe for liquidity, the quick and cash ratios showed considerable volatility, signaling shifts in the company's ability to cover immediate liabilities with liquid assets. The troughs in late 2022 indicate periods of tighter liquidity, followed by improvement in 2024, but the trend towards the latter quarters of 2025 highlights renewed tightening. These patterns suggest active management or varying operational conditions impacting liquidity and highlight the importance of monitoring liquid asset levels alongside broader current assets for a complete picture of financial robustness.

The analysis of the quarterly financial metrics reveals several key trends concerning liquidity and short-term financial health over the observed periods.

Current Assets

Current assets showed a general upward trend from 1,694,545 thousand US dollars in early May 2020 to peaks beyond 4 million thousand US dollars by early 2024. Although fluctuations exist, the overall movement indicates growth in the company's short-term asset base, suggesting an increasing ability to cover current obligations.

Current Liabilities

Current liabilities increased over the same timeframe, rising from 631,496 thousand US dollars to approximately 1.8 million thousand US dollars towards the end of the period under review. This increase, while significant, is less pronounced in percentage terms compared to the rise in current assets, demonstrating a manageable growth in short-term obligations.

Current Ratio

The current ratio varied between 1.86 and 2.72 throughout the periods, with no sustained downward or upward trend but demonstrating cyclical fluctuations reflective of seasonal or operational variations. Ratios consistently stayed above 1.5, indicating an adequate level of current assets relative to current liabilities. Notably, the lowest current ratio of 1.86 was observed around early 2022, while the highest was 2.72 around mid-2024, suggesting periods of relatively stronger liquidity.

Overall, the liquidity position appears stable with current assets generally outpacing current liabilities. This pattern signifies prudent working capital management and a capacity to meet short-term financial commitments comfortably over the durations analyzed. Minor fluctuations in the current ratio likely reflect normal business cycles rather than any structural weakness.

Total Quick Assets

The total quick assets exhibit considerable volatility over the observed periods. Initially, there is a significant decline from approximately 872 million to about 541 million within the first three quarters. This is followed by a sharp recovery peaking at nearly 2.37 billion around the first quarter of 2024. Subsequently, the quick assets trend downward but maintain a relatively elevated level above 1.2 billion towards the end of the reported timeframe. These fluctuations suggest varying liquidity positions across quarters with some periods of strong asset availability and others of contraction.

Current Liabilities

Current liabilities generally show an upward trajectory with some oscillations. Starting at approximately 631 million, the liabilities increase consistently reaching a peak above 1.83 billion around November 2025. There are minor decreases located intermittently, such as between the first and second quarter of 2024, but the overall trend indicates growing short-term obligations throughout the periods analyzed.

Quick Ratio

The quick ratio mirrors the variability seen in assets and liabilities. Early in the timeframe, the ratio dips below 1.0 to as low as 0.34, indicating potential liquidity constraints despite some recovery periods. A notable increase occurs in early 2024 where the ratio peaks above 1.4, reflecting improved liquidity and better coverage of current liabilities by quick assets. However, this improvement is not sustained, as the ratio declines again towards the latter quarters, ending below 1.0. The persistent fluctuations signal inconsistent liquidity management or external influences affecting the company’s ability to cover short-term liabilities promptly.

Insights

The interplay between quick assets and current liabilities drives the oscillatory behavior in the quick ratio, which remains below or near the critical benchmark of 1.0 in multiple quarters. This suggests periodic pressure on liquidity. The peak in quick assets and quick ratio in early 2024 might indicate a temporary strengthening of financial health, possibly due to strategic asset management or improved cash flow. However, the subsequent declines underscore a need for ongoing monitoring of liquidity to ensure obligations can be met without stress.

Total cash assets

The total cash assets exhibit notable fluctuations over the observed periods. Initially, cash assets decreased from approximately 823 million USD to around 482 million USD within the first three quarters. Subsequently, a recovery phase is observed with values peaking near 1.25 billion USD by early 2022. However, this peak is followed by a decline to a trough below 353 million USD in late 2022. From that point onward, there is a significant and sustained increase culminating in cash assets reaching over 2.2 billion USD by early 2024. Following this peak, the cash balance trends downward again but remains above 1 billion USD in the most recent periods.

Current liabilities

Current liabilities show a general upward trajectory across the time frame. Starting at approximately 631 million USD, liabilities steadily rise to exceed 1.4 billion USD by early 2022. Despite minor fluctuations, the upward trend continues with liabilities reaching approximately 1.83 billion USD by early 2025, suggesting increasing short-term obligations over time.

Cash ratio

The cash ratio, which measures the ability to cover current liabilities with cash and cash equivalents, demonstrates significant volatility. Initially, the ratio declined sharply from 1.3 to 0.66 in late 2020, indicating a reduced liquidity position. It then rebounded to around 1.3 by early 2021, reflecting improved liquidity. Another decline ensued, reaching a low of 0.27 in late 2022, indicating a weakened cash coverage against current liabilities. Following this low, the ratio improved again, peaking at 1.38 in early 2024, which corresponds with the peak in cash assets. The ratio declines once more towards the end of the period, settling near 0.56, indicating reduced liquidity relative to current liabilities in the latest quarter.

Overall analysis

The data reveals a pattern of fluctuating liquidity levels with cash assets and cash ratio moving in cycles of increase and decrease. Peaks in cash positions align with improved liquidity ratios, while periods of cash depletion correspond with lower coverage of current liabilities. Meanwhile, current liabilities consistently rise over the timeline, which may impose growing liquidity demands. The increasing liabilities combined with volatile cash ratios suggest that managing short-term obligations remains a significant aspect of the company’s financial position.