Lowe’s Cos. Inc. (NYSE:LOW)

The analysis of liquidity ratios over the given periods reveals several notable trends that provide insight into the company's short-term financial health and its ability to meet current obligations.

Current Ratio

The current ratio exhibited modest fluctuations throughout the timeline. Starting at 1.2, it generally hovered close to this level, reaching a peak of approximately 1.38 early in the period. A gradual decline was observed thereafter, with some intermittent recoveries. In the most recent quarters, the ratio showed a slight downward trend, ending around 1.05. This pattern suggests that the company's ability to cover current liabilities with current assets remained relatively stable but experienced a mild weakening over time.

Quick Ratio

The quick ratio demonstrated significant variability and generally stayed at lower levels compared to the current ratio. Initially, the quick ratio increased from 0.34 to about 0.6, then experienced notable declines, falling as low as approximately 0.07 during certain periods. While it showed some recovery in later periods, the ratio failed to exhibit sustained improvement, closing near 0.24. This indicates that the company's most liquid assets, excluding inventory, provided limited coverage of short-term liabilities, possibly reflecting reliance on inventory or temporary fluctuations in liquid asset management.

Cash Ratio

The cash ratio mirrored the trend observed in the quick ratio exactly across all reported periods, starting at 0.34, peaking at 0.6, and experiencing declines to as low as 0.07, before partially recovering and concluding near 0.24. Given that cash and cash equivalents are included in quick assets, this uniformity implies that most of the quick assets consist of cash equivalents, underscoring a relatively constrained level of readily available cash relative to current liabilities.

In summary, the company's liquidity, as measured by the current ratio, has remained modestly stable with slight declines indicating cautious management of working capital. However, the lower and more volatile quick and cash ratios suggest limited availability of highly liquid assets to cover immediate obligations without reliance on inventory turnover. The pattern reveals potential focus areas in liquidity management to prevent strain during periods of financial stress.

Current Assets

The current assets exhibit fluctuations over the reported periods, with values ranging approximately between $19 billion and $27 billion. Early data points show a peak around mid-2020, followed by a general decline during early 2022, and moderate recoveries thereafter. From early 2023 onward, the current assets tend to remain relatively stable, settling mostly between $19 billion and $23 billion, with occasional increases that are not sustained. This pattern suggests variable liquidity levels, potentially influenced by seasonal factors or changing operational needs.

Current Liabilities

Current liabilities similarly demonstrate variability, fluctuating mostly within a $15 billion to $23 billion range. Peaks are noticeable around mid-2020 and again roughly around mid-2025, which could imply periods of increased short-term obligations. Following these peaks, there tend to be periods of reduction or stabilization. The earlier periods show some elevated liabilities, with a modest downward trend into late 2023 before a rise again. This oscillation may reflect shifts in vendor credit terms, accrued expenses, or other short-term financing adjustments.

Current Ratio

The current ratio, an indicator of short-term liquidity, varies from just above 1.0 up to about 1.38. This ratio generally remains above 1, indicating that current assets exceed current liabilities throughout the periods, albeit marginally at times. There is a visible downward trend starting in mid-2024 to mid-2025, with ratios approaching close to 1.0, signaling tighter liquidity conditions. Earlier periods had somewhat stronger liquidity positions, with the highest ratio observed around late 2020. The fluctuations in the current ratio correspond with the variations in current assets and liabilities, suggesting that changes in one are often counterbalanced by changes in the other.

Overall Insights

The data implies a company managing liquidity with some volatility, possibly influenced by operational cycles or external market conditions. Despite fluctuations, the maintenance of a current ratio around or slightly above 1 over many quarters suggests a consistent approach to meeting short-term obligations. The declining trend in the current ratio in the most recent quarters may warrant attention, as it hints at decreased buffer in liquidity. Stakeholders might consider monitoring working capital management practices to ensure sufficient liquidity amid potential increases in liabilities toward the later periods.

Total Quick Assets

The total quick assets have demonstrated significant volatility over the analyzed periods. Initially, there was a peak observed in July 2020 at 12,726 million USD, followed by a decline reaching a low point of 1,404 million USD in January 2022. After this trough, the quick assets showed some recovery with fluctuations, peaking again at 4,690 million USD in August 2024 before declining once more to 3,422 million USD in August 2025. This pattern indicates a lack of consistent growth in liquid assets available to cover short-term liabilities, suggesting periods of liquidity stress or asset restructuring.

Current Liabilities

Current liabilities show a generally stable but slightly fluctuating trend, ranging between approximately 15,568 million USD and 22,388 million USD. Notably, after peaking around April and July 2021, current liabilities experienced a gradual decline, reaching their lowest point in February 2023. However, liabilities increased again in the subsequent periods, reaching values above 21,000 million USD by the end of the latest period in August 2025. This indicates that the company's short-term obligations remain substantial, with some cyclical variation but no sustained reduction.

Quick Ratio

The quick ratio, which measures the ability to cover current liabilities with liquid assets, exhibits consistently low values throughout the period. The ratio commenced at 0.34 in May 2020, improved to 0.60 in July 2020, but then declined sharply, hitting a minimum of 0.07 in January 2022. While there was slight improvement thereafter, the quick ratio remained below 0.3 for most quarters, with values frequently below 0.2, pointing to ongoing liquidity constraints. The ratio's fluctuations parallel changes in quick assets more closely than current liabilities, underscoring that quick assets' variability primarily influences liquidity ratios.

Overall Analysis

The data portrays a company facing liquidity challenges, as evidenced by the low quick ratio sustained over multiple quarters. Although current liabilities oscillate, they remain at high levels relative to quick assets, which have declined substantially from earlier peaks. The inability to significantly improve the quick ratio suggests limited capacity to rapidly meet short-term obligations without relying on inventory sales or other less liquid assets. This situation requires attention to ensure financial stability, possibly by improving asset management or reducing short-term liabilities.

Total Cash Assets

The total cash assets exhibit a fluctuating pattern over the observed periods. Initially, from May 2020 to July 2020, there was a significant increase, peaking in July 2020 at 12,726 million USD. This was followed by a decline through early 2021, reaching a low point of 1,404 million USD in January 2022. Subsequently, the cash assets showed intermittent recovery and decline cycles, with moderate rebounds in mid-2022 and again in 2024, though these peaks remained well below the early 2020 levels. Overall, the trend suggests considerable volatility in cash holdings, with a general long-term downward tendency when comparing the earliest and latest data points.

Current Liabilities

Current liabilities have generally remained elevated throughout the period, starting at 18,325 million USD in May 2020 and frequently surpassing 20,000 million USD in subsequent quarters. There was a noticeable peak in April 2021 at 22,892 million USD, after which levels mostly fluctuated around the 19,000 to 22,000 million USD range. While some quarters in 2023 and early 2024 recorded a slight reduction, current liabilities increased again toward the end of the latest period, closing at 21,622 million USD in August 2025. The data shows a sustained high level of short-term obligations without clear evidence of significant reduction over time.

Cash Ratio

The cash ratio, which measures liquidity by comparing cash assets to current liabilities, mirrors the trends observed in cash and liabilities. Beginning with a moderate level of 0.34 in May 2020, it rose to a peak of 0.60 in July 2020 due to the surge in cash assets. However, the ratio declined sharply thereafter, reaching a trough of 0.07 in January 2022, indicating a substantial decrease in liquidity relative to current liabilities. In the subsequent periods, the ratio demonstrated only slight recovery phases but remained relatively low, mostly below 0.3. The volatility and generally low cash ratio suggest that liquidity pressure may have been a concern during the period, with cash reserves insufficient to cover a significant portion of current liabilities consistently.

Overall Insights

The company's liquidity position has experienced significant fluctuations, largely influenced by volatile cash asset levels while current liabilities remained persistently high. The early peak in cash holdings was not sustained, leading to a weakening of the cash ratio and thus liquidity standing during much of the observed timeframe. Despite occasional rebounds in cash assets, those gains were insufficient to effect a durable improvement in liquidity measures. The persistently elevated current liabilities further emphasize the need for careful management of short-term obligations. The data points toward a financial environment where liquidity risk might have increased, potentially impacting operational flexibility.