RH (RH)
Cash ratio
| Jan 31, 2025 | Feb 3, 2024 | Jan 31, 2024 | Jan 31, 2023 | Jan 28, 2023 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 30,413 | 123,688 | 123,688 | 1,511,760 | 1,508,100 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 905,126 | 872,868 | 872,868 | 885,973 | 885,973 |
| Cash ratio | 0.03 | 0.14 | 0.14 | 1.71 | 1.70 |
January 31, 2025 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($30,413K
+ $—K)
÷ $905,126K
= 0.03
The cash ratio for RH, a key liquidity ratio, indicates the company's ability to meet short-term obligations with its cash and cash equivalents.
- In January 28, 2023, the cash ratio was 1.70, suggesting that RH had $1.70 in cash and cash equivalents for every $1 of current liabilities. This indicates a healthy liquidity position, where RH can cover its short-term obligations comfortably.
- By January 31, 2023, the cash ratio slightly increased to 1.71, further strengthening RH's liquidity position.
- However, there was a significant decline in the cash ratio by January 31, 2024, and February 3, 2024, where the ratio dropped to 0.14. This sharp decrease may signal potential liquidity challenges for RH, as its cash position relative to current liabilities decreased substantially.
- The trend continued into January 31, 2025, with a cash ratio of 0.03, indicating a further deterioration in RH's ability to cover its short-term obligations with available cash.
Overall, the decreasing trend in RH's cash ratio from 2023 to 2025 raises concerns about the company's liquidity position and its ability to fulfill immediate financial obligations solely with cash reserves. Stakeholders should closely monitor RH's liquidity management strategies to ensure the company can maintain its financial health.