Chewy Inc (CHWY)

Chewy Inc's current ratio has shown improvement over the years, increasing from 0.83 in January 29, 2023, to 1.00 in January 28, 2024, and maintaining this level in January 31, 2024. This indicates the company's ability to cover its short-term liabilities with its current assets has strengthened. However, there was a slight decline to 0.75 by January 31, 2025, which may raise some concerns about the company's short-term liquidity position.

In terms of the quick ratio, Chewy Inc's ability to meet its short-term obligations with its most liquid assets has shown fluctuations. The ratio increased from 0.44 in January 29, 2023, to 0.61 in January 28, 2024, but then decreased to 0.27 by January 31, 2025. This suggests a potential decrease in the company's ability to quickly cover its current liabilities without relying on inventory.

Looking at the cash ratio, Chewy Inc has maintained a relatively stable position over the years, with the ratio staying around 0.3 for most of the periods analyzed. This indicates the company's ability to cover its current liabilities using only its cash and cash equivalents, providing a more conservative measure of liquidity.

Overall, Chewy Inc's liquidity ratios show a mixed performance, with improvements in some areas like the current ratio but declines in others such as the quick ratio. It is essential for investors and stakeholders to further analyze the reasons behind these fluctuations to assess the company's overall liquidity position effectively.

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Additional liquidity measure

Chewy Inc's cash conversion cycle has displayed fluctuating trends over the past few years. In January 2023, the company's cash conversion cycle was negative at -9.14 days, indicating that it was able to convert its inventory and receivables into cash at a quicker pace than paying off its payables. This suggests efficient cash management practices.

By January 2024, the cash conversion cycle improved further, reaching a negative value of -8.45 days, continuing the trend of effective working capital management. However, in the subsequent period ending January 31, 2024, there was a slight increase in the cash conversion cycle to 32.87 days, indicating a longer period required to convert inventories and receivables into cash relative to paying off payables.

The most recent data as of January 31, 2025, shows a further increase in the cash conversion cycle to 36.38 days. This suggests that Chewy Inc may be facing challenges in managing its working capital efficiently, possibly due to increased inventory levels or slower collection of receivables.

Overall, Chewy Inc's cash conversion cycle analysis reveals a mix of positive and negative trends over the years, demonstrating fluctuations in the company's ability to efficiently manage its working capital to generate cash flows. This analysis underscores the importance of monitoring and optimizing the cash conversion cycle to enhance liquidity and financial performance.