Bath & Body Works Inc. (BBWI)
Liquidity ratios
| Feb 3, 2024 | Oct 28, 2023 | Jul 29, 2023 | Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Current ratio | 1.64 | 1.39 | 1.56 | 1.63 | 1.64 | 1.34 | 1.39 | 1.41 | 2.33 | 2.08 | 1.72 | 1.72 | 1.97 | 1.48 | 1.31 | 1.06 | 1.37 | 1.15 | 1.20 | 1.34 |
| Quick ratio | 1.01 | 0.43 | 0.78 | 0.93 | 1.06 | 0.37 | 0.51 | 0.66 | 1.72 | 1.17 | 0.84 | 0.96 | 1.48 | 0.88 | 0.84 | 0.44 | 0.76 | 0.25 | 0.51 | 0.65 |
| Cash ratio | 0.84 | 0.29 | 0.65 | 0.82 | 0.89 | 0.20 | 0.36 | 0.52 | 1.53 | 1.00 | 0.76 | 0.92 | 1.38 | 0.79 | 0.76 | 0.36 | 0.63 | 0.13 | 0.38 | 0.52 |
Bath & Body Works Inc.'s liquidity ratios have shown fluctuations over the past several periods. The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has generally been above 1, indicating that Bath & Body Works has had enough current assets to meet its short-term obligations. However, there have been some periods where the current ratio dipped below 1, such as in October 2023 and May 2020. This may indicate potential liquidity concerns during those periods.
The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Bath & Body Works' quick ratio has varied significantly, with some periods showing levels below 1, such as in October 2023 and May 2019. These lower quick ratios suggest that the company may have had difficulty meeting its short-term obligations without relying on inventory.
The cash ratio, which is the most stringent measure of liquidity as it only considers cash and cash equivalents, has also fluctuated over time for Bath & Body Works. While the company has generally maintained cash ratios above 1, indicating a strong ability to cover short-term liabilities with cash on hand, there have been periods where the cash ratio dropped below 1, such as in October 2023 and August 2019.
Overall, Bath & Body Works Inc.'s liquidity ratios show a mixed performance, with some periods indicating potential liquidity challenges. It is essential for the company to closely monitor and manage its liquidity position to ensure it can meet its short-term obligations effectively.
Additional liquidity measure
| Feb 3, 2024 | Oct 28, 2023 | Jul 29, 2023 | Apr 29, 2023 | Jan 28, 2023 | Oct 29, 2022 | Jul 30, 2022 | Apr 30, 2022 | Jan 29, 2022 | Oct 30, 2021 | Jul 31, 2021 | May 1, 2021 | Jan 30, 2021 | Oct 31, 2020 | Aug 1, 2020 | May 2, 2020 | Feb 1, 2020 | Nov 2, 2019 | Aug 3, 2019 | May 4, 2019 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 31.07 | 44.25 | 25.93 | 27.51 | 26.29 | 70.63 | 45.57 | 31.34 | 28.90 | 28.66 | 16.61 | 13.77 | 16.34 | 19.85 | 29.11 | 38.43 | 34.24 | 77.93 | 48.96 | 53.32 |
The cash conversion cycle of Bath & Body Works Inc. has shown some fluctuations over the past few reporting periods. The cash conversion cycle is a measure of how efficiently the company is able to convert its resources into cash flow. A shorter cash conversion cycle indicates that the company is able to quickly convert its inventory into sales and then into cash.
Looking at the data provided, we can see that the cash conversion cycle ranged from a low of 13.77 days to a high of 77.93 days over the past couple of years. The lowest cash conversion cycle of 13.77 days was reported on July 31, 2021, indicating that Bath & Body Works was able to efficiently manage its inventory, accounts receivable, and accounts payable during that period.
On the other hand, the highest cash conversion cycle of 77.93 days was reported on November 2, 2019, suggesting that the company may have faced challenges in converting its inventory into cash flow during that time.
Overall, Bath & Body Works Inc. should aim to maintain a lower cash conversion cycle to ensure efficient operations and healthy cash flows. Management should continue to monitor and optimize the company's inventory turnover, accounts receivable collection, and accounts payable payment cycles to improve its cash conversion cycle in the future.