Home Depot Inc. (NYSE:HD)

Current Ratio

The current ratio demonstrates moderate fluctuations throughout the observed periods. Initially, it increased from 1.17 to 1.36, indicating a strengthening liquidity position in mid to late 2020. Following that peak, the ratio declined to a low near 1.01 in early 2022, suggesting a reduction in current assets relative to current liabilities. Thereafter, the ratio generally recovered, reaching peaks around 1.41 in early 2023 and maintaining values slightly above 1.3 in subsequent quarters. Towards the end of the timeline, a downward trend is observed, with the ratio decreasing to approximately 1.05 by late 2025. Overall, the company maintained a current ratio slightly above 1, indicating a consistent but modest margin of short-term asset coverage over liabilities.

Quick Ratio

The quick ratio exhibits a more pronounced decline over the analyzed timeframe. The ratio started at 0.48 in early 2020, rising to around 0.69 in August 2020, indicating higher immediate liquidity excluding inventories at that time. However, a steady decline followed, bottoming near 0.18 in mid-2022, which reflects reduced liquid assets available to cover current liabilities. Despite some minor recoveries to values around 0.28 by late 2025, the ratio remains considerably lower than the early 2020 levels. This trend implies a diminishing capability to meet short-term obligations without relying on inventory sales.

Cash Ratio

The cash ratio showed significant volatility and an overall diminishing pattern. Starting at 0.37 in early 2020, the ratio improved to about 0.58 by mid-2020, indicating a relatively strong cash position initially. Subsequently, it declined sharply, reaching lows near 0.05 to 0.06 multiple times from late 2021 through 2025. These low values suggest a minimal cash buffer relative to current liabilities. Occasional slight rebounds were observed, but the cash ratio never returned to its early peak levels. This reflects a trend of lower cash reserves on hand to cover immediate liabilities, highlighting increased reliance on other current assets or financing methods for liquidity.

The analysis of the quarterly financial data reveals varying trends in current assets, current liabilities, and the current ratio over the observed periods.

Current Assets

Current assets exhibit fluctuations throughout the timeline, starting at $27,277 million and experiencing several periods of growth and decline. Notably, assets peaked at $35,529 million in the May 2025 quarter. Initial quarters saw increases followed by intermittent decreases; from May 2020 to November 2020, current assets increased significantly, then decreased around early 2021, fluctuating moderately in the subsequent periods. The trend shows an overall upward trajectory towards the later quarters, indicating improved liquidity positions or asset accumulation over time.

Current Liabilities

Current liabilities follow a somewhat similar fluctuating pattern, beginning at $23,348 million and eventually rising to $34,367 million in November 2025. There are distinct increases notably around mid-2021 to mid-2022, and again towards the later part of the timeline. These increases suggest higher obligations within the short term, possibly due to expanded operations or increased payables. The pattern indicates that while liabilities have generally increased, they do so alongside assets, which affects the liquidity ratios.

Current Ratio

The current ratio shows variability around a value slightly above 1.0, ranging from a low of 1.01 to a high of 1.41 during the January 2023 quarter. Early periods demonstrated a fairly high ratio, indicating good short-term liquidity, followed by a decline around mid-2021 where the ratio neared 1.06. Subsequently, the ratio rose again, peaking above 1.4, which signals strengthened short-term financial health. However, towards the most recent quarters, the current ratio gradually decreased towards 1.05, approaching the minimum acceptable threshold of liquidity.

Overall Interpretation

The overall financial position depicts a company managing increasing current liabilities alongside growing current assets, with liquidity ratios reflecting the tight balance between these elements. Although current assets generally outpace liabilities, the narrowing margin in the most recent quarters suggests a need for close monitoring of working capital management to ensure ongoing financial stability. The fluctuations in the current ratio highlight periods of both improved and constrained liquidity, reflecting operational dynamics and possibly, changing market conditions affecting short-term financial management.

The analysis of the quarterly financial data reveals significant fluctuations in the liquidity position as reflected by total quick assets, current liabilities, and the quick ratio over the observed periods.

Total Quick Assets

Total quick assets exhibited a pronounced volatility throughout the timeline. Initially, there was a substantial increase from approximately 11,306 million US dollars to a peak near 17,318 million by the end of 2020. Following this peak, a consistent downward trend occurred during much of 2021 and into early 2022, reaching a low around 4,984 million US dollars. Mid-2022 onwards, quick assets showed some recovery and fluctuations, hovering mostly between 5,000 and 8,600 million US dollars, without establishing a stable upward or downward trend towards the latest periods.

Current Liabilities

Current liabilities showed a generally increasing trend over the full period, rising from approximately 23,348 million US dollars in early 2020 to a value near 34,367 million by the last period in late 2025. Despite some interim declines, especially around late 2022 and early 2023, the overall pattern indicates escalating short-term obligations with several peaks and slightly lower troughs, pointing towards growing working capital demands or possibly increased short-term financing.

Quick Ratio

The quick ratio, measuring immediate liquidity by comparing quick assets to current liabilities, displayed a weak and mostly declining trend over the periods. Starting at 0.48 in early 2020, it peaked slightly around 0.69 to 0.68 mid-2020, then steadily decreased to a low near 0.18–0.20 in early 2022. After that low point, it oscillated mostly between 0.22 and 0.34 with some minor recoveries but remained below 0.35 throughout. This indicates a persistent strain on the company’s ability to cover current liabilities with liquid assets, highlighting potential liquidity risk or increased reliance on non-liquid assets or financing.

In summary, the company’s liquid asset base has been unstable with notable declines following initial growth, while current liabilities have generally increased. Consequently, liquidity as measured by the quick ratio has weakened and not returned to previous higher levels. The data suggests pressures on short-term financial strength and a need for attention to liquidity management strategies going forward.

Total Cash Assets

Over the observed periods, total cash assets exhibit a generally declining trend with notable fluctuations. Initially, there was a peak around August and November 2020, reaching above $14 billion, followed by a pronounced decrease through early 2021. Subsequent quarters show a continuing downward pattern with intermittent modest recoveries. From early 2022 onwards, cash assets mostly remained below $4 billion, often fluctuating closer to the lower end of this range, with occasional short-term increases. The overall trajectory suggests a depletion or strategic reduction of liquid cash reserves relative to earlier periods.

Current Liabilities

Current liabilities have shown a gradual upward trend from May 2020 through to late 2025. Starting at approximately $23.3 billion, there is a steady increase that generally continued despite some short-term decreases. Peaks are observed sporadically, with the highest values near the end of the dataset exceeding $34 billion. This indicates a growing level of short-term financial obligations on the company’s balance sheet over time, which may reflect increased operational activity, financing, or other liability-incurring events.

Cash Ratio

The cash ratio, an indicator of liquidity measuring cash relative to current liabilities, demonstrates a sharp decline from initial levels close to 0.58 in mid-2020 down to consistently very low values under 0.2 after early 2021. The ratio dips as low as 0.04 to 0.09 in multiple later quarters, suggesting the company holds a relatively small amount of cash to cover its short-term liabilities. This diminished liquidity position points to increased reliance on other current assets or forms of liquidity or possibly a strategy to optimize capital allocation through reduced cash holdings.

Summary of Financial Position Trends

The combination of decreasing total cash assets and increasing current liabilities over the periods analyzed results in a significant decline in the cash ratio, indicating reduced cash liquidity relative to short-term obligations. This trend could imply growing operational scale or changes in working capital management. The data highlights a shift in the company’s liquidity dynamics, warranting close monitoring from a financial risk perspective, especially in terms of short-term solvency and the capacity to meet immediate liabilities with readily available cash.