Skechers USA Inc (SKX)

Skechers USA Inc's liquidity ratios provide insight into the company's ability to meet its short-term obligations.

The current ratio, which measures the firm's ability to cover its current liabilities with its current assets, has been decreasing over the past few years, from 2.76 in December 2020 to 1.97 in December 2024. This may indicate a slight decrease in the company's short-term liquidity position.

The quick ratio, which is a more stringent measure of liquidity as it excludes inventory from current assets, has also shown a declining trend, from 1.21 in December 2020 to 0.55 in December 2024. This suggests that the company may be becoming less able to meet its short-term obligations without relying on inventory.

Similarly, the cash ratio, which focuses solely on the ability to cover current liabilities with cash and cash equivalents, has decreased from 1.21 in December 2020 to 0.55 in December 2024. This downward trend underscores a potential reduction in Skechers USA Inc's immediate liquidity position over the years.

Overall, the declining trend in all three liquidity ratios highlights the importance of monitoring Skechers USA Inc's ability to meet its short-term obligations as its liquidity position appears to have weakened over the years.

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Additional liquidity measure

The cash conversion cycle of Skechers USA Inc has shown some fluctuations over the years. It increased from 154.14 days in December 2020 to 168.53 days in December 2021, indicating a longer time taken to convert resources into cash. In the subsequent year, the cycle remained relatively stable at 168.88 days.

However, there was a notable improvement in efficiency by December 2023, with the cycle declining to 144.69 days, suggesting a reduction in the time taken to generate cash from operating activities. Nevertheless, by December 2024, the cycle increased again to 166.73 days, indicating a potential challenge in managing the cash flow effectively.

Overall, Skechers USA Inc should focus on optimizing its cash conversion cycle to ensure efficient utilization of resources and timely cash generation from its operations.