RH (RH)
Cash ratio
| Feb 3, 2024 | Jan 28, 2023 | Jan 29, 2022 | Jan 30, 2021 | Feb 1, 2020 | ||
|---|---|---|---|---|---|---|
| Cash and cash equivalents | US$ in thousands | 123,688 | 1,508,100 | 2,177,890 | 100,446 | 47,658 |
| Short-term investments | US$ in thousands | — | — | — | — | — |
| Total current liabilities | US$ in thousands | 872,868 | 885,973 | 1,063,760 | 921,632 | 982,912 |
| Cash ratio | 0.14 | 1.70 | 2.05 | 0.11 | 0.05 |
February 3, 2024 calculation
Cash ratio = (Cash and cash equivalents + Short-term investments) ÷ Total current liabilities
= ($123,688K
+ $—K)
÷ $872,868K
= 0.14
The cash ratio measures the company's ability to cover its short-term liabilities with its available cash and cash equivalents. A higher cash ratio indicates a stronger ability to meet short-term obligations without relying on external financing.
Based on the data provided:
- The cash ratio for RH has fluctuated over the past five years, ranging from 0.05 to 2.05.
- In January 2022, the cash ratio was the highest at 2.05, indicating an ample amount of cash to cover short-term liabilities.
- The cash ratio dropped significantly in January 2021 to 0.11, suggesting a decreased ability to cover short-term obligations with cash resources.
- The cash ratio improved in January 2023 to 1.70, indicating a recovery in the company's liquidity position.
- As of February 2024, the cash ratio stands at 0.14, which is relatively lower compared to the previous year but still indicates a moderate ability to meet short-term liabilities with available cash.
Overall, while the cash ratio of RH has experienced fluctuations, it is essential for the company to maintain a balance between having enough cash to cover short-term obligations and investing excess cash for future growth opportunities.