Signet Jewelers Ltd (SIG)

Signet Jewelers Ltd's liquidity ratios indicate the company's ability to meet its short-term obligations. The current ratio has fluctuated over the past five years, ranging from 1.56 to 1.91. The latest current ratio of 1.79 as of February 3, 2024, suggests that the company's current assets are 1.79 times its current liabilities, showing a relatively healthy short-term financial position.

The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity as it excludes inventory from current assets. Signet Jewelers Ltd's quick ratio has also varied, with the latest ratio of 0.71 for February 3, 2024. This means that for every dollar of current liabilities, the company has $0.71 in highly liquid assets to cover these obligations, highlighting a moderate level of liquidity.

The cash ratio, which is the most conservative liquidity measure, indicates the company's ability to cover current liabilities with cash and cash equivalents alone. Signet Jewelers Ltd's cash ratio has ranged from 0.23 to 0.70 over the last five years, with the latest ratio of 0.70 as of February 3, 2024. This implies that the company has $0.70 in cash and cash equivalents for every dollar of current liabilities, reflecting a strong ability to settle short-term debts promptly.

Overall, Signet Jewelers Ltd's liquidity ratios demonstrate a relatively stable and healthy liquidity position over the years, with the current ratio and cash ratio indicating a better ability to meet short-term obligations compared to the quick ratio. Monitoring these ratios can provide insights into the company's liquidity management and financial health.

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Additional liquidity measure

Signet Jewelers Ltd's cash conversion cycle has shown some fluctuations over the past five years. The cycle measures the time it takes for the company to convert its investments in inventory and other resources into cash flows from sales.

In the most recent fiscal year ending February 3, 2024, Signet Jewelers' cash conversion cycle was 54.77 days. This represents a slight increase from the previous year's 54.13 days. The company's cash conversion cycle has been relatively stable in recent years, with a low of 51.62 days in January 29, 2022, and a high of 107.31 days in February 1, 2020.

A shorter cash conversion cycle indicates that Signet Jewelers is able to efficiently manage its inventory and collect payments from customers, resulting in quicker cash flows. On the other hand, a longer cash conversion cycle could indicate potential inefficiencies in inventory management or slower collection of receivables.

Overall, Signet Jewelers' cash conversion cycle has shown improvement compared to the high of 107.31 days in 2020, but there may still be opportunities for the company to further streamline its operations to enhance cash flow efficiency.