GameStop Corp (GME)

Based on the provided data, GameStop Corp's liquidity ratios have shown a generally positive trend over the years.

The current ratio, which measures the company's ability to cover short-term liabilities with its current assets, has increased from 1.74 in January 2023 to 8.05 in January 2025. This indicates that GameStop Corp's current assets have increased significantly compared to its current liabilities, suggesting improved short-term financial stability and liquidity.

The quick ratio, a more stringent measure of liquidity that excludes inventories from current assets, has also demonstrated a positive trend, rising from 1.15 in January 2023 to 7.18 in January 2025. This indicates that GameStop Corp has sufficient liquid assets to cover its short-term obligations without relying on inventory sales.

Moreover, the cash ratio, which assesses the company's ability to cover its current liabilities with only cash and cash equivalents, has followed a similar upward trajectory, increasing from 1.04 in January 2023 to 7.18 in January 2025. This suggests that GameStop Corp has significantly increased its cash reserves in relation to its short-term liabilities, enhancing its ability to meet immediate financial obligations.

Overall, the liquidity ratios of GameStop Corp reflect a strengthening financial position in terms of its ability to meet short-term obligations, manage working capital, and withstand unexpected financial challenges.

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See also:

GameStop Corp Liquidity Ratios

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Additional liquidity measure

The cash conversion cycle of GameStop Corp has shown fluctuations over the years. As of January 28, 2023, the company had a cash conversion cycle of 21.62 days, indicating a relatively efficient conversion of inventory to cash. However, by January 31, 2023, this cycle increased significantly to 54.72 days, suggesting potential issues with inventory management and collection of receivables.

The trend continued into the following years, with the cash conversion cycle reaching 57.23 days on January 31, 2024. This prolonged cycle may indicate inefficiencies in the company's operations, leading to a longer time to convert sales into cash. However, GameStop Corp made improvements by February 3, 2024, bringing the cycle down to 34.60 days, signaling enhanced efficiency in managing inventory and receivables.

Despite this improvement, the cash conversion cycle increased again to 64.70 days as of January 31, 2025, suggesting a potential regression in operational effectiveness. Overall, GameStop Corp needs to focus on optimizing its inventory management and collection practices to shorten the cash conversion cycle and enhance its cash flow efficiency.