Guess? Inc. (GES)

Guess? Inc.'s liquidity ratios provide insights into its ability to meet short-term obligations. The current ratio has ranged from 1.32 to 1.59 over the past few years, indicating the company generally has sufficient current assets to cover current liabilities. However, there was a slight decrease in the current ratio towards the end of the period, which may indicate a need to monitor liquidity levels closely.

The quick ratio, reflecting Guess? Inc.'s ability to meet short-term obligations without relying on inventory, has been more volatile, fluctuating between 0.09 and 0.85. This suggests potential challenges in quickly covering liabilities with liquid assets, particularly during periods of lower values.

The cash ratio, which measures the company's ability to pay off current liabilities using only cash and cash equivalents, has also shown fluctuations, ranging from 0.19 to 0.51. While the cash ratio remained relatively stable in the middle period, it dropped significantly towards the end, raising concerns about the company's reliance on cash for immediate obligations.

Overall, Guess? Inc.'s liquidity ratios highlight the importance of carefully managing cash and liquid assets to ensure the company can meet its short-term financial obligations effectively. It may be prudent for the company to implement strategies to enhance liquidity and maintain a healthy balance between current assets and liabilities to support its ongoing operations.

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Additional liquidity measure

The cash conversion cycle of Guess? Inc. has fluctuated over the past few years, ranging from a low of 69.82 days on February 3, 2024, to a high of 128.56 days on October 31, 2024. This cycle represents the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

Generally, a shorter cash conversion cycle is favorable as it indicates that the company is able to efficiently manage its working capital and generate cash quickly from its operating activities. On the other hand, a longer cycle may suggest inefficiencies in managing inventory, collecting receivables, or paying suppliers.

Guess? Inc. experienced a notable improvement in its cash conversion cycle from July 30, 2022, to January 31, 2023, where the cycle decreased from 78.42 days to 88.22 days. This suggests that the company may have optimized its working capital management during that period.

However, the cycle increased significantly from January 31, 2024, to October 31, 2024, reaching its peak of 128.56 days. This rise could indicate challenges in inventory management, delayed collections, or extended payment terms with suppliers during that timeframe.

Overall, monitoring the cash conversion cycle is essential for identifying operational efficiencies and potential liquidity issues within Guess? Inc. It is important for the company to strive for a balance between timely cash flows and effective working capital management to support its financial health and sustainable growth.