Steven Madden Ltd (SHOO)

The liquidity ratios of Steven Madden Ltd. for the past five years indicate the company's ability to meet its short-term obligations and the extent to which it holds liquid assets to cover immediate liabilities.

The current ratio, which measures the company's ability to pay off its current liabilities with its current assets, has fluctuated over the years. The ratio decreased from 2.56 in 2019 to 2.17 in 2021 but improved to 2.63 in 2022 before declining slightly to 2.26 in 2023. This suggests that the company may have experienced some challenges in managing its short-term obligations in 2021 but has since shown improvement in its liquidity position.

The quick ratio, also known as the acid-test ratio, provides a more conservative measure of liquidity by excluding inventory from current assets. Similar to the current ratio, the quick ratio has exhibited fluctuations over the years. It decreased from 2.07 in 2019 to 1.58 in 2021, before increasing to 1.92 in 2022 and then declining to 1.66 in 2023. This indicates that the company may have a lower ability to cover its short-term liabilities without relying on inventory in 2021 but has since improved its quick liquidity position.

The cash ratio, which indicates the proportion of cash and cash equivalents to current liabilities, also shows variability across the years. The ratio declined from 1.16 in 2019 to 0.68 in 2021, before increasing to 1.02 in 2022 and then dropping to 0.70 in 2023. This suggests that the company had lower levels of cash reserves relative to current liabilities in 2021 but has since enhanced its ability to cover short-term obligations with cash on hand.

Overall, Steven Madden Ltd.'s liquidity ratios demonstrate a mix of strengths and challenges in managing short-term obligations and holding liquid assets. The company's management should continue to monitor these ratios to ensure adequate liquidity to sustain operations and meet financial obligations in the future.

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Additional liquidity measure

The cash conversion cycle of Steven Madden Ltd. has fluctuated over the past five years. In 2023, it increased to 88.04 days from 77.94 days in 2022. This indicates that the company took a longer time to convert its resource inputs into cash receipts from sales.

Comparing this with 2021 when the cash conversion cycle was 115.93 days, the company improved its efficiency in cash conversion. However, in 2020 and 2019, the cycle was lower at 97.97 days and 76.93 days, respectively.

Overall, the trend in the cash conversion cycle suggests that Steven Madden Ltd. has experienced some variability in efficiently managing its cash flow and working capital over the past five years. It would be essential for the company to closely monitor and potentially improve its cash conversion cycle to enhance its financial performance and liquidity management in the future.