Dave & Buster’s Entertainment (PLAY)

Dave & Buster’s Entertainment liquidity ratios have shown significant fluctuations over the past five years. The current ratio, which measures the company's ability to cover its short-term obligations with its current assets, has ranged from a low of 0.27 in February 2020 to a high of 0.67 in January 2023. The current ratio for the most recent period, February 4, 2024, stands at 0.32, indicating a decline in liquidity compared to the previous year.

The quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, has also varied widely for Dave & Buster’s. It has ranged from a low of 0.09 in February 2020 to a high of 0.47 in January 2023. The quick ratio for February 4, 2024, is notably low at 0.14, signaling potential difficulty in meeting short-term obligations without relying on inventory.

The cash ratio, which shows the extent to which a company can cover its current liabilities with its cash and cash equivalents, has fluctuated considerably for Dave & Buster’s. Ranging from a low of 0.04 in January 2021 to a high of 0.41 in January 2023, the cash ratio for February 4, 2024, is recorded at 0.09. This indicates a decrease in the company's ability to cover its short-term liabilities solely with cash on hand.

Overall, the liquidity ratios for Dave & Buster’s Entertainment suggest a mixed picture, with periods of both strength and weakness. The company's ability to meet its short-term obligations varies significantly across the years analyzed, highlighting the importance of closely monitoring liquidity levels to ensure continued financial stability and operational flexibility.

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Additional liquidity measure

The cash conversion cycle of Dave & Buster’s Entertainment has fluctuated over the past five years, ranging from negative 84.12 days to negative 2.78 days. A negative cash conversion cycle indicates that the company is efficiently managing its working capital, suggesting that it is able to collect cash from customers faster than it pays suppliers and other creditors.

In 2024, the cash conversion cycle deteriorated significantly to negative 84.12 days, indicating a potential inefficiency in working capital management compared to the previous year. This could be a result of slower inventory turnover or longer accounts receivable collection periods.

Conversely, in 2021, the cash conversion cycle improved to the lowest level of negative 2.78 days, suggesting that the company was able to convert inventory to cash quickly and efficiently manage its receivables and payables during that period.

Overall, monitoring the cash conversion cycle is crucial for assessing the efficiency of Dave & Buster’s operations and understanding its ability to manage working capital effectively.