Urban Outfitters Inc (URBN)

Urban Outfitters Inc's liquidity ratios provide insights into the company's ability to meet its short-term obligations with its current assets.

1. Current Ratio: The current ratio measures the company's ability to pay off its current liabilities using its current assets. From 2021 to 2025, Urban Outfitters Inc's current ratio ranged from 1.29 to 1.39, showing a relatively stable position. A current ratio above 1 indicates that the company has more current assets than current liabilities, suggesting it can cover its short-term obligations.

2. Quick Ratio: The quick ratio, also known as the acid-test ratio, provides a more stringent measure of liquidity by excluding inventories from current assets. Urban Outfitters Inc's quick ratio ranged from 0.43 to 0.57 during the period. A quick ratio below 1 indicates that the company may have difficulty paying off its current liabilities without relying on selling inventory.

3. Cash Ratio: The cash ratio measures the company's ability to cover its short-term liabilities with cash and cash equivalents alone. Urban Outfitters Inc's cash ratio mirrored the quick ratio, ranging from 0.43 to 0.57, suggesting the company holds a sufficient level of cash to meet its immediate obligations.

Overall, Urban Outfitters Inc maintained a fairly stable current ratio over the years, indicating a healthy liquidity position. However, the lower quick and cash ratios suggest that a significant portion of its current assets consists of inventory, which may impact its ability to pay off short-term obligations quickly without selling inventory.

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Additional liquidity measure

The cash conversion cycle of Urban Outfitters Inc has shown slight variability over the past five years. In January 2021, the company's cash conversion cycle stood at 54.95 days, indicating that it took approximately 55 days for the company to convert its investments in inventory and other resources into cash flows from sales.

Subsequently, the cash conversion cycle increased to 68.07 days by January 2022, suggesting a delay in the company’s ability to convert its investments back into cash. However, by January 2023, the cash conversion cycle decreased to 63.67 days, indicating an improvement in the company's efficiency in managing its working capital.

In January 2024, Urban Outfitters Inc managed to further reduce its cash conversion cycle to 58.62 days, which implies a faster turnaround in converting investments into cash. Lastly, by January 2025, the cash conversion cycle increased slightly to 62.56 days, which still reflects a relatively efficient management of working capital.

Overall, Urban Outfitters Inc has demonstrated a varying but generally effective control over its cash conversion cycle in recent years, showcasing improvements in its working capital management.