Bath & Body Works Inc. (BBWI)

Based on the provided data, Bath & Body Works Inc.'s liquidity ratios demonstrate that the company's ability to meet its short-term obligations has varied over the years.

- The current ratio has remained relatively stable at around 1.64 from January 28, 2023, to February 3, 2024, indicating that the company had $1.64 in current assets for every dollar of current liabilities during this period. However, there was a slight decrease to 1.48 by January 31, 2025, which could signal a potential strain on short-term liquidity.

- The quick ratio, which provides a more stringent measure of liquidity by excluding inventory from current assets, fluctuated more significantly. It ranged from 0.84 on January 31, 2024, to 1.06 on January 28, 2023. The quick ratio dropped to 0.55 by January 31, 2025, suggesting a decrease in the company's ability to cover its current liabilities with its most liquid assets.

- The cash ratio also followed a declining trend, falling from 0.89 on January 28, 2023, to 0.55 by January 31, 2025. This indicates that Bath & Body Works Inc. had a decreasing amount of cash and cash equivalents compared to its current liabilities during this period.

In summary, while the company demonstrated reasonable liquidity with a stable current ratio around 1.64, the downward trends in the quick ratio and cash ratio over the years may raise concerns about Bath & Body Works Inc.'s ability to quickly meet its short-term obligations with its most liquid assets.

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Additional liquidity measure

The cash conversion cycle of Bath & Body Works Inc. experienced fluctuations over the years, reflecting changes in the company's operating efficiency.

At the beginning of January 28, 2023, the cash conversion cycle stood at 26.43 days, indicating a relatively efficient management of cash, accounts receivable, and inventory. However, by January 31, 2023, the cycle increased significantly to 60.11 days, suggesting potential challenges in converting sales into cash.

The trend continued into January 31, 2024, with the cash conversion cycle further rising to 61.81 days, signaling prolonged cash tied up in operations. Fortunately, by February 3, 2024, there was an improvement as the cycle decreased to 31.07 days, potentially reflecting more effective management of working capital.

By January 31, 2025, the cash conversion cycle increased significantly to 65.78 days, indicating a longer period to convert resources into cash. This trend suggests the need for Bath & Body Works Inc. to focus on optimizing its cash, accounts receivable, and inventory management to enhance operational efficiency and cash flow.