G-III Apparel Group Ltd (GIII)

The liquidity ratios for G-III Apparel Group Ltd have shown a consistent improvement over the past five years, indicating the company's ability to meet its short-term obligations effectively.

The current ratio has increased steadily, reaching 3.36 in January 2024 from 2.23 in January 2020. This ratio suggests that the company has $3.36 in current assets for every dollar of current liabilities, demonstrating a strong ability to cover its short-term obligations.

Similarly, the quick ratio has also displayed a positive trend, rising to 2.17 in January 2024 from 1.18 in January 2020. This ratio excludes inventory from current assets to provide a more conservative measure of liquidity, indicating that the company has $2.17 in highly liquid assets to cover each dollar of current liabilities.

The cash ratio, which is the most stringent measure of liquidity as it considers only cash and cash equivalents, has also improved significantly over the years. The ratio increased to 1.03 in January 2024 from 0.32 in January 2020, indicating that the company has $1.03 in cash and cash equivalents for every dollar of current liabilities.

Overall, the increasing trend in the liquidity ratios of G-III Apparel Group Ltd reflects a strengthening financial position and suggests that the company has a solid liquidity position to meet its short-term obligations.

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Additional liquidity measure

The cash conversion cycle of G-III Apparel Group Ltd has fluctuated over the past five years. In particular, it decreased from 137.85 days in January 2021 to 103.97 days in January 2020, indicating a shorter cycle period for the company. However, this trend reversed in the following years as the cash conversion cycle increased to 119.76 days in January 2022, further peaking at 134.45 days in January 2023, and then slightly improving to 109.59 days in January 2024.

A longer cash conversion cycle suggests that the company is taking longer to convert its investments in inventory back into cash, which may be indicative of potential inefficiencies in managing inventory, collections from customers, or payment to suppliers. On the other hand, a shorter cash conversion cycle implies a quicker turnover of cash, potentially indicating improved efficiency in managing working capital.

Overall, G-III Apparel Group Ltd should seek to optimize its cash conversion cycle to maintain a healthy balance between profitability and liquidity, ensuring that working capital is effectively managed to support the company's operations.