RH (RH)
Liquidity ratios
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | |
|---|---|---|---|---|---|
| Current ratio | 1.43 | 1.26 | 1.26 | 2.84 | 2.84 |
| Quick ratio | 0.03 | 0.23 | 0.14 | 1.71 | 1.79 |
| Cash ratio | 0.03 | 0.14 | 0.14 | 1.71 | 1.70 |
The current ratio measures RH's ability to cover its short-term liabilities with its current assets. RH's current ratio has shown a decreasing trend from 2.84 as of January 31, 2023, to 1.43 as of January 31, 2025. A current ratio of 1.0 or higher is generally considered healthy, indicating RH has more than enough current assets to cover its current liabilities. However, the decreasing trend in the current ratio over time may suggest potential challenges in meeting short-term obligations.
The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventory from current assets. RH's quick ratio has also decreased significantly from 1.79 as of January 28, 2023, to 0.03 as of January 31, 2025. A quick ratio below 1.0 may indicate potential difficulties in liquidating current assets quickly to meet short-term liabilities. The decreasing trend in the quick ratio raises concerns about RH's ability to quickly pay its obligations without relying on inventory.
The cash ratio measures RH's ability to cover its current liabilities with its cash and cash equivalents. RH's cash ratio has decreased from 1.70 as of January 28, 2023, to 0.03 as of January 31, 2025. A cash ratio of 1.0 or higher is considered strong, indicating the company can cover all of its current liabilities with its cash holdings alone. The declining trend in the cash ratio over time suggests potential liquidity challenges, as RH's cash holdings may not be sufficient to cover its short-term obligations.
Overall, the decreasing trends in all three liquidity ratios indicate potential liquidity concerns for RH, as the company's ability to meet its short-term obligations has weakened over time. It may be prudent for RH to closely monitor its liquidity position and take appropriate measures to improve its liquidity management.
See also:
Additional liquidity measure
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | ||
|---|---|---|---|---|---|---|
| Cash conversion cycle | days | 210.75 | 77.43 | 167.83 | 164.56 | 80.62 |
The cash conversion cycle for RH has shown fluctuations over the period analyzed. From January 28, 2023, to February 3, 2024, the cycle decreased initially from 80.62 days to 77.43 days, indicating an improvement in the efficiency of the company's cash management. However, by January 31, 2025, the cycle had significantly increased to 210.75 days, suggesting potential challenges in managing cash flows efficiently. Overall, monitoring and managing the cash conversion cycle effectively will be crucial for RH to optimize its working capital and operational efficiency in the future.