lululemon athletica inc. (NASDAQ:LULU)

Current Ratio

The current ratio displays notable fluctuations over the examined periods. Starting at 2.33, the ratio gradually increased to a peak of 2.91 by early 2020, indicating improved short-term liquidity. This was followed by a decline to a low of 1.86 in early 2022. Subsequently, the ratio showed a recovery trend, stabilizing between 2.0 and 2.7 from 2023 through mid-2024. Overall, the current ratio suggests the company has maintained a generally strong ability to cover its short-term liabilities, with some variability likely reflecting operational or seasonal influences.

Quick Ratio

The quick ratio experienced more pronounced volatility compared to the current ratio. Beginning near 1.19, it reached a high point of 1.83 in early 2020 before falling sharply to lows below 0.5 in late 2022, indicating periods of reduced immediate liquidity exclusive of inventory. After this trough, there was a partial recovery with the ratio climbing back above 1.4 in early 2024, but it then declined again towards 0.74 by late 2024. This pattern points to fluctuating availability of liquid assets other than inventory to meet short-term obligations, suggesting potential variability in cash management or inventory reliance.

Cash Ratio

The cash ratio trend closely mirrors that of the quick ratio, indicating that cash and cash equivalents have primarily driven changes in quick liquidity. Beginning at approximately 1.15, the ratio rose to 1.76 in early 2020 before declining sharply to around 0.27 by late 2022. From this low, it rebounded to roughly 1.38 in early 2024 but again declined in the subsequent quarters, reaching about 0.66 by late 2024. This fluctuation demonstrates that the company's immediate cash reserves have varied substantially, potentially reflecting shifting cash generation, usage, or investment practices over time.

The quarterly financial data reveals several notable trends in liquidity and the balance between current assets and current liabilities over the analyzed period.

Current Assets

Current assets exhibited a generally upward trajectory from May 2019 through April 2024, starting at approximately 1.17 billion USD and increasing to over 4 billion USD in early 2024. Some fluctuations are observed, including temporary declines around mid-2020 and early 2022; however, the prevailing trend indicates growth, reflecting an expansion in liquid and near-liquid resources available to meet short-term obligations.

Current Liabilities

Current liabilities also showed an increasing pattern, beginning near 503 million USD in May 2019 and reaching peaks above 1.8 billion USD by early 2025. There were periods of pronounced growth, particularly from late 2020 into 2022, where liabilities surged significantly. Despite these rises, some periods of relative stabilization occurred, suggesting fluctuations in short-term debt or payables management.

Current Ratio

The current ratio, which measures the company's ability to cover current liabilities with current assets, generally remained above 2.0, indicating strong liquidity. Initially standing at 2.33 in early 2019, the ratio climbed to a high of 2.91 in early 2020 before declining to approximately 1.86 by early 2022. From this trough, the ratio recovered gradually, hovering between 2.0 and 2.7 thereafter. These movements suggest that although liabilities increased, asset growth was often sufficient to maintain a comfortable liquidity margin.

Overall Insights

Over the time frame analyzed, both current assets and liabilities grew substantially, consistent with possible business expansion and increased operational scale. The liquidity position, as captured by the current ratio, remained robust despite some volatility, implying that the company has generally maintained an adequate buffer to meet short-term financial commitments. Temporary dips in the current ratio could signal periods of investment, increased short-term borrowing, or inventory accumulation, followed by recovery phases where asset management improved.

Total Quick Assets

The total quick assets exhibit notable fluctuations over the observed periods. Initially, values range between approximately $570,000 and $650,000 thousand from mid-2019 through early 2020. A significant increase is observed in early 2020 and early 2021, with figures exceeding $1,200,000 thousand in certain quarters. Following this, there is a general decline reaching a low point below $450,000 thousand by late 2022. Subsequently, the total quick assets recover sharply, peaking at nearly $2,400,000 thousand in early 2024, indicating periods of increased liquidity and asset availability interspersed with downturns.

Current Liabilities

Current liabilities demonstrate a generally upward trend throughout the timeframe. Starting near $500,000 thousand in mid-2019, these liabilities consistently increase almost every quarter, reaching close to $1,400,000 thousand by mid-2023. A peak exceeding $1,839,000 thousand occurs towards the late 2024 period, indicating rising short-term obligations for the entity over time. Some periods show slight decreases or stability, but the overall trajectory is of increasing liabilities.

Quick Ratio

The quick ratio shows significant volatility across the quarters. Early values between 1.08 and 1.19 suggest a moderately strong liquidity position, which sharply improves to 1.83 in early 2020. However, a decline follows, with ratios dropping below 0.5 in late 2022, reflecting a weakened ability to meet short-term liabilities with the most liquid assets. The ratio recovers variably thereafter, reaching above 1.4 in early 2024 before declining again towards the end of 2024. This oscillation indicates that the company's short-term financial health experiences periods of strength and vulnerability aligned with changes in quick assets and liabilities.

Overall Analysis

Liquidity measures indicate cyclical dynamics, with significant asset and liability movements affecting the quick ratio. The initial periods show relatively stable liquidity, followed by stress periods in late 2022 where quick assets drop sharply and liabilities remain elevated, causing low quick ratios. The company demonstrates recovery phases with surges in quick assets and improvements in the quick ratio, particularly around early 2024. Increasing current liabilities over time suggest growing short-term financing needs which, if not matched by liquid assets, could pressure liquidity. The pattern of fluctuating quick ratios highlights the importance of monitoring short-term financial management to maintain operational flexibility.

The financial data reveals several notable trends over the reviewed quarters, particularly regarding the company's liquidity and balance between cash assets and short-term obligations.

Total Cash Assets

The total cash assets demonstrate considerable volatility across the periods. Initially fluctuating around the mid-500,000 to just over 1,000,000 thousand US dollars range, there is a marked increase in early 2024, reaching a peak of approximately 2,243,971 thousand US dollars (January 28, 2024). Subsequently, the cash assets decline yet remain above the earlier average values, indicating potentially higher cash reserves in recent years compared to the 2019-2021 period.

Current Liabilities

Current liabilities show a consistent upward trend overall, starting at approximately 502,942 thousand US dollars in May 2019 and generally increasing to a peak of about 1,839,630 thousand US dollars by October 2024. This increase in short-term obligations suggests growing operational or financing activities requiring more current liabilities over time. Despite some fluctuations, the trajectory is upward, indicating increased liabilities in recent quarters relative to prior years.

Cash Ratio

The cash ratio has experienced substantial variation, reflecting changes in liquidity relative to current liabilities. Early in the timeframe, the ratio generally remained above 1.0, indicating cash assets were sufficient to cover current liabilities. However, between mid-2020 and mid-2023, the ratio frequently dips below 1.0, reaching a low of 0.27, illustrating periods of tighter liquidity and potential vulnerability in short-term financial stability. Beginning in late 2023 and into 2024, the ratio again rises above 1.0, suggesting an improvement in the company's ability to cover its current liabilities with cash.

Overall, the data suggest the company has experienced increasing current liabilities alongside fluctuating cash reserves, impacting liquidity as seen in the varying cash ratio. The periods of lower cash ratio point to intervals where the company may have faced liquidity pressures, while the improvement in the later periods suggests efforts or circumstances leading to strengthened short-term financial positioning.