Dave & Buster’s Entertainment (PLAY)

Dave & Buster’s Entertainment liquidity ratios indicate a declining trend over the years. The current ratio stayed around 0.67 in January 2023 and 2024 but dropped sharply to 0.32 by February 2024 and further to 0.22 by January 2025. This suggests a decrease in the company's ability to cover its short-term obligations with its current assets.

Similarly, the quick ratio followed a similar pattern, decreasing from 0.41 in January 2023 to 0.02 in January 2025. The quick ratio is even lower than the current ratio, indicating the company may have difficulties meeting its short-term obligations without relying on inventory.

The cash ratio, which measures the company's ability to cover its current liabilities using only its cash and cash equivalents, also showed a decline from 0.41 in January 2023 to 0.02 in January 2025. This indicates a significant decrease in the company's ability to pay off its short-term obligations with its readily available cash resources.

Overall, the declining trend in these liquidity ratios for Dave & Buster’s Entertainment raises concerns about its short-term financial stability and ability to meet its immediate obligations without resorting to additional financing or asset liquidation strategies.

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Additional liquidity measure

The cash conversion cycle of Dave & Buster’s Entertainment has shown varying trends over the past few years. In January 2023, the company had a negative cash conversion cycle of -41.47 days, indicating that it was able to generate cash before paying its suppliers and other expenses. This reversed in the following month, with a cycle of 53.68 days, suggesting a delay in converting inventory into cash.

By January 2024, the cash conversion cycle improved significantly to 9.17 days, indicating more efficient management of working capital. However, in February 2024, there was a sharp decrease to -84.12 days, indicating that the company was able to convert its inventory and receivables into cash at a much faster rate.

As of January 31, 2025, the cash conversion cycle increased to 46.21 days, which suggests a slight delay in converting inventory and receivables into cash compared to the previous year. Overall, Dave & Buster’s Entertainment has experienced fluctuations in its cash conversion cycle, but it has managed to improve its efficiency in working capital management over the analyzed period.