Lowe’s Cos. Inc. (NYSE:LOW)

The analysis of liquidity ratios over the examined periods reveals several noteworthy trends. The current ratio exhibited moderate fluctuations, starting at 1.01 in early 2020, rising to 1.19 in early 2021, and then decreasing and stabilizing around values slightly above 1.0 in the subsequent years, reaching 1.09 by early 2025. This indicates a generally stable ability to cover short-term liabilities with current assets, albeit with some variation.

Regarding the quick ratio, there was a notable increase from a low value of 0.06 in 2020 to 0.28 in 2021, followed by a sharp decline back to levels near 0.07 to 0.11 in the following years. This pattern suggests that the company experienced a temporary improvement in its liquid assets excluding inventory during 2021, but this was not sustained in the later periods.

The cash ratio closely mirrors the quick ratio, sharing the same values throughout the timespan. This indicates that the most liquid assets (cash and cash equivalents) follow the same trend as other quick assets, reflecting a consistent approach to holding cash relative to quick assets.

Current Ratio

Shows moderate variability with an overall upward trend peaking in 2021, indicating improved current asset coverage temporarily followed by slight normalization.

Quick Ratio

Displays a significant spike in 2021, suggesting increased liquidity excluding inventories for that year, but returns to lower levels subsequently.

Cash Ratio

Identical to quick ratio measurements, indicating stable proportions of cash within quick assets over time.

Overall, the liquidity position demonstrated by these ratios suggests that the company maintained sufficient short-term financial stability, with a temporary boost in liquid assets in 2021 that was not fully maintained in later years. The relatively low quick and cash ratios throughout most periods could imply a reliance on inventory for liquidity, warranting ongoing monitoring of working capital management.

The analysis of the financial data reveals several notable trends in the liquidity position over the six-year period. The current assets exhibit fluctuation with a peak observed in 2021 at $22,326 million, followed by a decline in the subsequent years, reaching $19,071 million in 2024 before a moderate recovery to $20,358 million in 2025.

Current liabilities follow a somewhat different trajectory, initially decreasing from $15,182 million in 2020 to $18,730 million in 2021, then increasing steadily to $19,668 million in 2022 and stabilizing near this level in 2023. A significant decrease is seen in 2024 to $15,568 million, before rising again to $18,757 million in 2025.

The current ratio reflects these movements, indicative of the company's short-term liquidity health. It starts close to parity at 1.01 in 2020, improves to 1.19 in 2021, signaling enhanced liquidity, but then declines to near 1.02 in 2022. Thereafter, the ratio improves progressively to a peak of 1.23 in 2024, suggesting relatively strong liquidity at that point, before tapering slightly to 1.09 in 2025.

Overall, the data indicates some volatility in both current assets and liabilities, with the current ratio generally maintaining a level above 1, which suggests the company has consistently sustained an ability to cover its short-term obligations. The improvement in the current ratio in 2024 is particularly noteworthy and may reflect strategic management of working capital during that period.

The financial data reveals significant fluctuations in the liquidity position of the company over the observed periods. The total quick assets exhibit considerable volatility, initially rising sharply from 876 million US dollars in early 2020 to a peak of 5196 million in early 2021, followed by a decline to 1404 million in early 2022. Subsequent periods show smaller variations, with values between 1228 million and 2133 million US dollars, indicating some recovery and stabilization but not reaching the 2021 peak.

Current liabilities increased steadily from 15182 million US dollars in early 2020 to a peak of 19668 million in early 2022. Following this, there is a decrease in current liabilities to 15568 million in early 2024, before rising again to 18757 million in early 2025. The overall pattern suggests an upward trend in short-term obligations, with some temporary reduction.

The quick ratio, which measures the company’s ability to meet its short-term liabilities with its most liquid assets, remains consistently low throughout the periods. It starts at 0.06 in early 2020 and rises to 0.28 in early 2021, coinciding with the spike in quick assets. Thereafter, it declines to a range between 0.07 and 0.11, indicating limited liquidity relative to current liabilities. Despite some fluctuations, the ratio does not approach or exceed 1, highlighting potential concerns about short-term financial health.

Liquidity Trends

Total quick assets and quick ratio show a peak in early 2021, followed by a decline and subsequent stabilization at lower levels, suggesting transient improvement in liquid resources.

Current Liabilities

Current liabilities trend upward overall, with a temporary dip in early 2024, indicating increasing short-term financial obligations over time.

Quick Ratio Analysis

The quick ratio remains well below 1 across all periods, pointing to potential challenges in covering current liabilities with liquid assets. The temporary peak in early 2021 corresponds to the highest quick assets but is not sustained.

Total Cash Assets

The total cash assets display significant fluctuations over the observed periods. There is a notable peak in early 2021 where cash assets surge to 5,196 million US dollars, a substantial increase from 876 million US dollars in early 2020. Following this peak, the cash assets decline sharply to 1,404 million US dollars in early 2022. Subsequent years show moderate variability, with cash assets ranging between approximately 1,200 and 2,100 million US dollars.

Current Liabilities

Current liabilities generally exhibit an upward trend from 15,182 million US dollars in early 2020 to 19,668 million US dollars in early 2022, reflecting an increase in short-term obligations. This is followed by a slight reduction to 19,511 million US dollars in early 2023 and a more pronounced decline to 15,568 million US dollars in early 2024. However, liabilities rise again to 18,757 million US dollars by early 2025, demonstrating volatility but an overall elevated level compared to the initial year.

Cash Ratio

The cash ratio generally aligns with the fluctuations seen in total cash assets but remains relatively low throughout the periods, indicating limited cash reserves relative to current liabilities. The ratio peaks at 0.28 in early 2021, coinciding with the peak in cash assets. In other years, the ratio remains below 0.11, showing that cash coverage of current liabilities is minimal, which may imply tighter liquidity conditions outside of early 2021.