PVH Corp (PVH)

PVH Corp's liquidity ratios have shown some fluctuation over the past five years.

The current ratio, which measures the company's ability to cover its short-term liabilities with its current assets, has decreased from 1.44 in 2020 to 1.18 in 2024. This downward trend indicates that PVH Corp may have less liquidity to meet its short-term obligations in the most recent fiscal year compared to the previous ones.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. PVH Corp's quick ratio has varied between 0.53 and 0.89 over the five-year period. The fluctuations in this ratio suggest that the company's ability to cover its immediate liabilities with its most liquid assets has been inconsistent.

The cash ratio, which is the most conservative measure of liquidity and indicates the proportion of current liabilities covered by cash and cash equivalents, has shown a similar fluctuating pattern, ranging from 0.20 to 0.64. PVH Corp's cash ratio decreased from 0.64 in 2021 to 0.26 in 2024, indicating a potential decrease in the company's ability to pay off its current liabilities solely with its cash reserves.

Overall, PVH Corp's liquidity ratios reflect some variability in its ability to cover short-term obligations with its current assets, with a general downward trend in recent years. This may signal a need for the company to closely monitor and manage its liquidity position to ensure it can meet its financial obligations in a timely manner.

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Additional liquidity measure

The cash conversion cycle of PVH Corp has shown variability over the past five years. In the most recent year, ending February 4, 2024, the cash conversion cycle decreased to 64.21 days from 81.82 days the year before. This reduction may indicate an improvement in the company's ability to manage its working capital efficiently.

Comparing to two years ago, the cash conversion cycle was significantly shorter at 41.88 days on January 30, 2022. This suggests that the company was able to convert its investments in inventory and receivables into cash more quickly during that period.

However, the cash conversion cycle increased to 64.69 days on January 31, 2021, indicating a slower conversion of inventory and receivables into cash compared to the previous year. Similarly, on February 2, 2020, the cash conversion cycle was longer at 86.49 days, showing a potential inefficiency in managing working capital during that period.

Overall, PVH Corp's cash conversion cycle has fluctuated over the years, with periods of improvement and decline. Analyzing this metric can provide insights into the company's operational efficiency and working capital management strategies.