Victoria's Secret & Co (VSCO)

The liquidity ratios of Victoria's Secret & Co have seen a decline over the past three years. The current ratio, which measures the company's ability to meet short-term obligations with its current assets, decreased from 1.10 in January 2023 to 0.95 in February 2024, indicating a potential weakening in liquidity.

Similarly, the quick ratio, a more stringent measure of liquidity that excludes inventory from current assets, also declined from 0.36 in January 2023 to 0.26 in February 2024. This suggests a reduced ability to cover immediate liabilities without relying on inventory.

Furthermore, the cash ratio, which reflects the proportion of current liabilities that can be covered by cash and cash equivalents, decreased from 0.27 in January 2023 to 0.17 in February 2024. This indicates a notable reduction in the company's ability to settle short-term obligations solely with cash on hand.

Overall, the downward trend in these liquidity ratios suggests a potential strain on Victoria's Secret & Co's ability to meet its short-term financial commitments and may warrant closer monitoring to ensure adequate liquidity management in the future.

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Additional liquidity measure

The cash conversion cycle of Victoria's Secret & Co decreased from 43.72 days in January 2023 to 38.02 days in February 2024, indicating an improvement in the company's management of its working capital. This decrease suggests that Victoria's Secret & Co has been able to convert its investments in inventory and accounts receivable into cash more efficiently over the period.

Furthermore, comparing the latest cash conversion cycle of 38.02 days in February 2024 to the one from two years ago in January 2022 (34.11 days), we observe a slight increase. This could imply that the company may have experienced some challenges in managing its working capital efficiently during this period.

Overall, Victoria's Secret & Co's cash conversion cycle has shown fluctuations over the past three years, but the recent decrease indicates an improvement in their ability to convert raw materials into finished goods, sell products, collect payments, and ultimately convert them into cash. Further analysis of the components contributing to this cycle would provide additional insights into the company's operational efficiency and financial performance.