The 1 Key Metric to Watch for Retailers During Earnings Season
While sales are surging at some retailers such as Walmart and Target as U.S. consumers stock up on stay-at-home staples, a larger share of chains have had to close up shop or turn their focus to e-commerce. And for some of those, the digital channel has up till now been a small part of the revenue picture. For them, the COVID-19 pandemic means revenue will slow precipitously, and for the worst hit, drop close to or at zero.
Between those extremes sit a large number of companies that are in the middle of a rough ride, but it's likely that they'll make it through the coronavirus shutdowns intact, as long as they have enough cash on hand to stay afloat until consumer spending gets back to something close to normal. That's why the one metric for investors to watch when it comes to retailers this earnings season is liquidity.
In financial terms, liquidity measures how much cash a company has compared to its outstanding short-term debt.
Source Fool.com
